Nutanix’s (NASDAQ:NTNX) shift to a software-first strategy will remain front-and-center when the company reports fiscal third-quarter earnings this evening.
RBC Capital’s analyst Matthew Hedberg expects “strong” results from the storage and compute upstart, with upside to consensus estimates and guidance. Hedberg believes sentiment around the stock has improved with the pivot to software and recent analyst day, though estimates remain beatable.
As such, Hedberg reiterates an Outperform rating on Nutanix shares, while raising the price target to $62 (from $58), which represents a potential upside of 12% from where the stock is currently trading.
Hedberg wrote, “Conversations with channel contacts were again positive throughout the quarter and we expect upside to our billings/revenue/EPS estimates of $333M/$278M/($0.20) which is in-line with mid-point of revenue/EPS guidance and compares to consensus at $333M/$278.7M/($0.19) […] As we recently wrote, we expect no change to the expected timing of Xi Cloud Services launch despite media reports to the contrary. We expect early customer trials this summer and availability for additional customers in the second half of the year. We came away from the recent analyst day with the view that Nutanix is a rare combination of disruptive growth (30%+ software growth for the foreseeable future) with the potential for significant margin expansion (400-600bps per year) that stands out on the “rule of 40″ spectrum with vendors such as CRM, NOW, SPLK and WDAY.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Matthew Hedberg has a yearly average return of 32.4% and a 79% success rate. Hedberg has a 61.2% average return when recommending NTNX, and is ranked #8 out of 4809 analysts.
Out of the 24 analysts polled in the past 12 months, 21 rate Nutanix stock a Buy, 2 rate the stock a Hold and 1 recommends a Sell. With a return potential of 4%, the stock’s consensus target price stands at $57.84.