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Nutanix Impresses at Investor Day; Stock Hits 52-Week High

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Nutanix Inc. (NTNX) gave impressive business insights at its Annual Investor Day, which was held on June 22. It was followed by a series of upgrades from several analysts from renowned research houses.

Nutanix is a cloud computing company that sells software, cloud services, and software-defined storage systems. (See Nutanix stock chart on TipRanks)

The stock touched an all-time high of $40.71 during intraday trading, following the upgrades. After witnessing a volatile day, shares closed marginally up 0.5% at $39.14 on June 23.

Shares gained 7.6% in just two days, compared to a gain of 17.8% over the past six months.

Investor Day Highlights

The company has an opportunity to grow in the total addressable market (TAM), which is expected to reach around $60 billion in 2025. The TAM includes $30 billion in HyperConverged Infrastructure (HCI) space and another $35 billion in the adjacent market, Hybrid Cloud Infrastructure, which includes Desktop-as-a-Service, Database automation, and Disaster Recovery-as-a-Service.

Management said it expects the company’s revenue to grow at a 20%+ CAGR and Annual Contract Value (ACV) Billings to grow at a CAGR of 25%+ ($1.475 to $1.625 billion) through 2025.

Additionally, the company expects to reduce its Sales and Marketing expenses to 43%-47% of revenue by 2025, compared to the current 79% of FY20 revenue.

The company expects to earn positive free cash flows by H1FY23, and a positive operating profit by H2FY23 or H1FY24.

Analysts’ Views

Following the Investor Day announcements, Bofa analyst Wamsi Mohan reiterated a Buy rating on the stock and lifted the price target to $54 (38% upside potential) from $46.

Mohan said, “Nutanix is the largest name in the nascent HyperConverged infrastructure market with 35% share, and was the first company to gain widespread acceptance among large enterprises.”

The analyst remains bullish on NTNX based on several factors, including strong top-line growth, strong renewal billing CAGR, a faster path to profitability, and falling Sales and Marketing expenses.

Another analyst, Jack Andrews of Needham, assigned a Buy rating to the stock and lifted the price target to $61 (55.8% upside potential) from $47.

Andrews said, “We view NTNX as a true visionary in the infrastructure software space and given the ambitious product roadmap as well as our recent highly positive customer conversations, we believe it is simply of a question of when, not if, NTNX will be able to meaningfully reaccelerate growth.”

Northland Securities analyst Nehal Choksi said the Investor Day guidance exceeded his bullish model and accordingly lifted the price target on NTNX to $52 (32.9% upside potential) from $48 while maintaining a Buy rating.

With 9 Buys and 4 Holds, NTNX has a Moderate Buy consensus rating. The average analyst Nutanix price target of $46.36 implies an 18.5% upside to current levels. Shares gained 72.5% over the past year.

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