Yet another analyst has weighed in on Nutanix Inc (NASDAQ:NTNX) and pushed sales forecast higher for the hyper-converged infrastructure maker.
Maxim analyst Nehal Chokshi reiterated a Buy rating on NTNX, but raised his price target from $54 a share to $71 a share. That suggests a 30% upside for the stock. (To watch Chokshi’s track record, click here)
Why all the excitement? Yesterday, NTNX held an Investor Day in NYC where it presented an impressive vision built around its plan to become the enterprise cloud, a hybrid data management and control plain that makes all underlying infrastructure invisible to the user with built-in automation and machine learning to facilitate operations. Importantly, the company laid out a $3 billion/FY21 billings target that beat the Street’s expectations.
Chokshi commented, “Too early to credit today, but investors should be cognizant of NTNX’s potential transition to a consumption-based model that would represent Act III in driving significant long-term shareholder value creation. […] We are skeptical of NTNX being able to become a material IaaS player in terms of revenue share, but we believe the opportunity to capture the value of an IaaS player within the context of a domineering, distributed data and application management infrastructure software player is indeed viable […] We note CMO Ben Gibson presented a slide that the server and storage IaaS market today is ~$40B in annual revenue, which we believe will continue to grow at a 20+% CAGR for multiple years. We also note that multiple infrastructure software companies have made transitions from perpetual license, to SaaS business models, including Adobe (ADBE – NR) and Cadence Design Systems (CDNS – NR) as CEO Dheeraj Pandey pointed out, which has resulted in a ~3.5x and 10x increase in shareholder value, respectively, since the beginning of those transitions.”
Out of 18 analysts polled by TipRanks (in the past 3 months), 15 rate Nutanix stock a Buy, 2 rate the stock a Hold and 1 recommends a Sell.