Nutanix Inc (NASDAQ:NTNX) stock rose 3.77% (As on September 22, 11:34:36 AM UTC-4, Source: Google Finance) after Wamsi Mohan, an esteemed analyst at Bank of America Securities, revised his stance on the company from Neutral to Buy. Mohan has also increased the price target for the company from $39 to $50. The analyst see fundamentals improving over the next few years including [average contract value] billings, revenue, and operating margin. The analyst also see renewals driving a higher portion of ACV billings growth post F24, which can lead to more stable revenues, and expect operating leverage through lower cost of renewals. BofA pointed to the company’s “GPT-in-a-Box” offering and its recent partnership with Cisco as both potential growth drivers.
NTNX has recently launched ‘GPT-in-a-Box,’ a full stack, software-defined platform that provides AI-ready infrastructure which customers can use to run generative pre-trained transformers, as per the analysts.
NTNX has recently announced a partnership with Cisco which combines the Nutanix cloud platform with Cisco’s UCS compute, cloud management, networking and security. NTNX will benefit from Cisco’s extensive go-to-market reach as it sells NTNX’s hybrid multi-cloud software.
Nutanix investors will also be watching the upcoming acquisition of VMware by Broadcom. “If Broadcom chooses to limit its focus to VMware’s largest customers, the analyst see the opportunity for NTNX to gain share at other customers,” the analysts added. Cisco is taking the entire cloud platform. So cloud infrastructure, cloud management, unified storage, all of it, integrating that with Cisco UCS, Cisco Intersight.
The company had reportedbetter-than-expected quarter supported by a customer base that continues to modernize its IT services, increasingly onto the cloud. At $494.2 million fourth-quarter revenue was up 28% year-over-year, and, surpassed analyst forecasts of $475 million. Earnings meanwhile came in at 24 cents per share, versus an expected 16 cents, though the company still had reported a $13.3 million net loss. Nutanix raised its first-quarter revenue estimate to a range of between $495 million to $505 million compared to analyst estimates of $487 million. Nutanix attributed its strong results to high customer renewal rates as it completed its transition from a licensing to a subscription revenue model. Annual recurring revenue grew 30%, to $1.56 billion in the quarter, and annual contract value bookings jumped 44%. The company also improved its gross margins to 85.8%, up from 82.6% a year ago.