Nutanix Inc: Valuation Offsets Savvy “Software Metamorphosis” Spearheaded by Calm Infrastructure Orchestration Tool

BTIG's Edward Parker calls Nutanix a smart HCI player to grab at further value-added capabilities, but valuation keeps him hedging his bets.


Nutanix Inc (NASDAQ:NTNX) continues to transform in the tech market after leading a technology conversation this week to shed further light on Calm: the firm’s just-launched automation and lifecycle management product  that enables consumers to cultivate a multi-cloud strategy prioritizing applications.

One voice on the Street shares his two cents on the enterprise infrastructure equipment maker’s opportunity, noting that ever since Nutanix bought calm.io in August of 2016, this tech integration has been a work in progress. Though the infrastructure orchestration offering stands in its “early days,” meaning an instant revenue ramp is yet to be seen, this introduction of Calm speaks to a compelling long-term evolution at play.

BTIG analyst Edward Parker believes this “software metamorphosis” is “clearly indicative of NTNX’s quest to expand beyond core HCI towards a much more comprehensive re-think of the management of enterprise IT infrastructure.”

On a positive note, “Calm and the NTNX marketplace can reduce friction in the development process with pre-integrated blueprints and one-click app provisioning […] By reducing the need for multiple handoffs between dev teams when configuring apps, the marketplace is effectively democratizing the app provisioning process,” explains the analyst.

Additionally, Parker comments that this is a tool that allows workloads to shift between public and private clouds, but with an advantage- Calm gets rid of “the pain of reconfiguring mission-critical deployments.” Moving forward, the NTNX management team plans to integrate Azure as well as Google Cloud “in short order, based on consumer demand,” adds Parker.

Bigger picture, “NTNX is wise to stay ahead of the HCI pack by adding more value-added capabilities to its core offering, as we think basic HCI will likely commoditize down the road,” the analyst surmises, noting that valuation is the main piece of the puzzle keeping him sidelined on Nutanix: “Trends are promising, but with shares trading at 5.7x EV/sales, valuation offsets our otherwise constructive view.”

Therefore, for now, the analyst reiterates a Neutral rating on NTNX stock without listing a price target. (To watch Parker’s track record, click here)

TipRanks underscores largely optimistic analyst sentiment circling the tech stock. Based on 13 analysts polled in the last 3 months, 10 rate a Buy on Nutanix stock, 2 maintain a Hold, while 1 is bearish on the stock. With a return potential of nearly 25%, the stock’s consensus target price stands at $41.50.

Stay Ahead of Everyone Else

Get The Latest Stock News Alerts