PSTG
Pure Storage Inc.
$86.22
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 190.1% above fair value
You pay
$86.22
Bear
$19.43
Fair
$29.72
Bull
$41.83
Bear
$19.43
-77.5%
10% stage 1 growth, 12% discount
Fair
$29.72
-65.5%
17% stage 1 growth, 12% discount
Bull
$41.83
-51.5%
23% stage 1 growth, 12% discount
Adjust Assumptions
17.5%
12.0%
3.0%
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
40%
Implied Market Multiple
104.2x
Market is pricing in (growth)
33.4%
vs 17.5% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (32 analysts)
$87.00
Divergence from AlphaVal
66%
Summary
Using a two-stage FCF DCF with 17% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $29.72 per share.
Warnings
Stock-based employee pay equals 256% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $87.00 (from 32 analysts). Our estimate is 66% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions