Oppenheimer analyst Ittai Kidron has named Nutanix Inc (NASDAQ:NTNX) as one of his top picks for 2018. The analyst believes investors underappreciate just how far Nutanix’s technology base extends, leveraging Acropolis, AHV, Prism, CALM, and Xi (mid-2018).
The analyst reiterates an Outperform rating on Nutanix shares, while lifting the price target to $43 (from $40), which implies an upside of 15% from current levels.
Kidron stated, “Nutanix is one of our top 2018 picks, given our bullish belief that investors underappreciate its shift to a software model. We believe the shift will (1) lessen sales friction with OEM and channel partners, (2) expand Nutanix’s opportunities in hybridcloud deployments and with subscription services (first with Xi), and (3) deliver faster than expected gross margin expansion. While investor expectations and valuation already reflect a positive shift for the software transition, we believe confidence will grow and multiples will expand further as results over the next quarters confirm a quick exit from hardware (targeted 2/3 by end of FY18) and a big shift to software-heavy product gross margins (we believe eventually >80%).”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ittai Kidron has a yearly average return of 11.7% and a 59% success rate. Kidron has a 51.3% average return when recommending NTNX, and is ranked #264 out of 4755 analysts.
Kidron is not the only fan of the hyper-converged infrastructure maker on Wall Street, as TipRanks analytics exhibit NTNX as a Strong Buy. Based on 15 analysts polled in the last 3 months, 12 rate a Buy on Nutanix stock while 3 maintain a Hold. The 12-month average price target stands at $39.83, marking a 7% upside from where the stock is currently trading.