It sure is a great week to be a Nutanix Inc (NASDAQ:NTNX) investor. Between Merill Lynch’s Wamsi Mohan boosting his price target anticipating a guidance beat come the tech player’s first analyst day Monday and a new bull in BTIG analyst Edward Parker, shares are seeing an almost 6% surge today.
As far as Parker is concerned, he knows he is “late to the party” when it comes to backing the cloud software firm. It is not that Parker is without any “reservations” in recommending Nutanix, but he believes this “stock is poised to continue to outperform the broader market in 2018.”
Therefore, the analyst is now “compelled” to recommend NTNX, upgrading from a Neutral to a Buy rating on the stock with a $53 price target, which implies a 7% upside from current levels. (To watch Parker’s track record, click here)
“Nutanix shares have had an incredible 10 months – since bottoming out in the low teens last May, shares have more than tripled. During that time, the company has successfully recast itself from being the leader of an increasingly competitive and rapidly commoditizing HCI segment to a fledgling ‘Enterprise Cloud OS’. While we missed Nutanix’s resurgence, we won’t let ourselves miss its further ascension up the IT stack and its transcension of traditional infrastructure categories,” underscores Parker.
Before, the analyst’s neutral case hinged upon “tension between an admiration of strong execution and ambitious strategic vision and concern regarding the likelihood of competition and commoditizing forces that pose risk to sustainable high margin growth.” Yet, Parker now dismisses his concerns as “largely theoretical,” considering what an “impressive financial performance” the company has showcased coupled with “evidence in the field.”
Ultimately, the analyst will keep his eyes on the “competition like a hawk,” but with a continuously expanding total addressable market (TAM), “this feels largely at bay” at the end of the day.
TipRanks showcases positive sentiment laced with some caution when it comes to who chooses to bet on Nutanix. Out of 14 analysts polled in the last 3 months, 11 are bullish on NTNX shares, 2 remain sidelined, while 1 is bearish on the stock. However, considering that 12-month average price target of $45.91 suggests almost 7% in loss potential from where the stock is currently trading, these expectations are somewhat weighed down by apprehension.