Nutanix: Upgrade to Buy. Optimism thanks to better fundamental data and the upcoming analyst day.
Bank of America analysts are getting more bullish on enterprise cloud platform provider Nutanix (NTNX) thanks to better fundamentals and the upcoming analyst day. Shares of enterprise cloud platform provider Nutanix (NTNX) are rather volatile and had jumped significantly in early September. Nutanix is a cloud computing software company that specializes in delivering hyper-converged infrastructure (HCI) solutions. Nutanix reduces the complexity of data centers and makes them easier to manage and scale. The company provides solutions for managing...
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'post_content' => 'Bank of America analysts are getting more bullish on enterprise cloud platform provider Nutanix (NTNX) thanks to better fundamentals and the upcoming analyst day.
Shares of enterprise cloud platform provider Nutanix (NTNX) are rather volatile and had jumped significantly in early September. Nutanix is a cloud computing software company that specializes in delivering hyper-converged infrastructure (HCI) solutions. Nutanix reduces the complexity of data centers and makes them easier to manage and scale. The company provides solutions for managing multi-cloud environments, enabling enterprises to achieve greater control and cost efficiency when using multiple cloud services. Nutanix is addressing a rapidly growing market that is expected to reach $61 billion by 2025. In 2020, it had been less than $40 billion.
Strategic partnership with Cisco
Nearly 25,000 leading companies now rely on the platform. In the process, the company is able to grow strongly, especially with large customers. Just a few weeks ago, the company announced a new global strategic partnership with Cisco. This represents a new milestone. This partnership is about combining the best solutions of both companies. Cisco will combine the Nutanix cloud platform along with its UCS compute and cloud management, which is deeply integrated with its networking and security system. It is a fully integrated solution with joint development, interoperability and extended support, and will be sold by Cisco.
Potential from the AI era
According to the company, potential is also offered by the AI era, and it sees a new opportunity in the growing demand for generative AI. For this reason, the company had recently launched \'GPT-in-a-Box\'. This is a complete software-defined AI-enabled platform along with services to help customers in sizing and configuring hardware and software. The goal is to provide a select set of Large Language Models (LLMs) using the leading open source AI frameworks on the platform. This will enable customers to easily deploy an AI-enabled infrastructure to fine-tune and execute generative pre-trained transformers or GPTs while maintaining control over their data and applications.
Record quarter in Q4
By the end of August, the company had reported a record quarter for Q4 revenue which had increased by over 28% year over year to $494 million. The consensus had expected only $475 million. Earnings per share were also a positive surprise at $0.24 (consensus: $0.16). In addition, the company had launched a $350 million share buyback program against the backdrop of strong free cash flow performance in fiscal 2023.
Bank of America becomes significantly more optimistic
Analysts at Bank of America upgraded the stock from Neutral to Buy on Thursday (Sept. 21) and raised the price target from $39 to $50. The upside potential at that point was around 50%. Fundamentals will improve over the next few years and renewals are expected to account for a higher share of revenue growth after FY24, they said. The new \'GPT-in-a-Box\' product, the partnership with Cisco and potential share gains are upward factors, they say. Analysts also point to the company\'s upcoming analyst day on Tuesday (September 26) as the \'next catalyst\'.
Nutanix (ISIN US67059N1081): The stock initiated a strong rebound in the summer of 2022, and this is now continuing. This year, EPS of $0.79 is expected to be achieved. Next year, it should be $1.05. The valuation is not interesting with a forward P/E 2024 of 44. Only speculative traders are active here.
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