Analyst Revises Estimates on Nutanix Inc (NTNX) After FQ1 Beat and Strong FQ2 Guidance

By Carrie Williams

The enterprise cloud platform provider, Nutanix Inc. (NASDAQ: NTNX) received a Buy reiteration with a $37 target price from Robert W. Baird analyst Jayson Noland, according to a report issued today. This PT is an upside of 13.98% from the current price of $32.46.

Baird maintain Buy, revise estimates for Nutanix Inc. (NTNX) after FQ1 beat and strong FQ2 guidanceNearly a month after its IPO, the leading provider of hyperconverged infrastructure solutions had announced its maiden FQ1 results and reported both earnings as well as revenue beat. The guidance offered for FQ2 was also higher than the street consensus. The shares of NTNX opened today at $34.44, above its 20-day SMA of $29.65.

NTNX had reported an FQ1 EPS of -$0.37 (beats by $0.07) and revenue of $166.8 million (+90.1% YoY) on November 29. The FQ2 revenue guidance announced by the company was in the range of $175 to $180 million (vs. Street’s $168 million). The company also guided FQ2 GM to approximately 60% and is investing gross margin upside in areas such as China to grow footprint.

Reacting to the FQ1 and FQ2 numbers announced, Jayson Noland updated the brokerage firm’s estimates for F17 as well as F18. For F17, the revenue estimates were raised from $718 million to $744 million while the non-GAAP EPS estimates were retained as -$1.38. The F18 estimates were also revised, with revenue of $1.0 billion and EPS of -$0.93, assuming a YoY growth of 38% for NTNX.

Noland believes that positive drivers like FQ1 billings performance, solid customer adoption, Cisco UCS support, upcoming new product launches, double-digit bookings from software-only sales to OEM partners Dell and Lenovo, and possibility of partnership or M&A would push the prices of NTNX further ahead in near future.

The company had recently announced their intention to expand its capabilities into Networking and Security while deepening its integration with a rich ecosystem of technology partner (e.g., PANW, ANET). The management sees their cloud opportunity as the time warp between an enterprise-friendly VMware and a consumer-friendly AWS and believes that hybrid cloud environments will dominate for the foreseeable future.

Based on analyst recommendations on NTNX, the overall consensus rating is currently a Moderate Buy according to The analysts have an average price target of $33.88, implying an upside of 4.37% from the last close.