On Thursday, Nutanix Inc . (NASDAQ:NTNX) shares experienced a shift in their stock rating. Northland has downgraded the company from Outperform to Market Perform, though the firm has maintained its stock price target of $71.00. This decision follows the closing of Nutanix shares above the firm's set price target.
The company's April results prompted Northland to maintain the $71 price target. However, the downgrade to Market Perform reflects a cautious stance due to the shares exceeding this target.
Despite acknowledging the significant potential for growth from increased prices on VMW SKUs by Broadcom (NASDAQ:AVGO), Northland expressed reservations about the impact on new ACV billings growth for Nutanix. This concern arises from an expectation that the SME sector would have already begun to positively influence new ACV for Nutanix, given the shorter deal cycle.
Northland has slightly adjusted its long-term growth estimate for Nutanix, lowering it from 20% to 19%. Consequently, the firm has also revised its terminal period revenue estimate down to $9.943 billion from $10.761 billion, and its terminal period free cash flow (FCF) estimate to $3.818 billion from $4.347 billion. Despite these adjustments, Northland still believes in Nutanix's strong position in the market.
Nutanix is recognized for its durable differentiation in the Hyper-Converged Infrastructure (HCI) sector, as well as in hybrid cloud and database automation. According to Northland, Nutanix's HCI stands out due to its distributed systems architecture, which offers greater system resiliency and performance compared to VMW's vSAN.
Moreover, Nutanix's approach to hybrid cloud is considered unique because of its use of public cloud APIs, which facilitates the seamless portability of workloads and licenses across different public clouds.
InvestingPro Insights
As Nutanix Inc. (NASDAQ:NTNX) navigates market expectations and analyst downgrades, real-time data from InvestingPro provides a broader perspective on the company's financial health and stock performance. Nutanix's impressive gross profit margin stands at 83.85% for the last twelve months as of Q2 2024, signaling strong cost management and pricing power.
Moreover, the company's liquid assets have surpassed its short-term obligations, indicating a solid liquidity position that may reassure investors concerned about the company's ability to meet its immediate financial commitments.
InvestingPro Tips also highlight that analysts predict Nutanix will turn profitable this year, which could be a pivotal moment for the company's financial trajectory. Furthermore, with a large price uptick over the last six months, culminating in a 70.09% six-month price total return, the stock is trading near its 52-week high, reflecting robust investor confidence.
For those interested in deeper analysis, InvestingPro offers additional tips on Nutanix, providing a comprehensive view of the company's potential. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
InvestingPro Data also reveals a market capitalization of $17.91 billion USD, which showcases the company's significant presence in the market. While the P/E ratio is currently negative at -258.9, reflecting the company's past earnings challenges, the anticipated return to profitability could be a game-changer for valuation metrics. With 13 additional InvestingPro Tips available, investors have ample detailed analysis at their fingertips to make informed decisions about their interest in Nutanix.
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