Oppenheimer Names Nutanix A 2018 Top Pick, Lays Out Bull Case
With the market extending its bull run, here's a recommendation from Oppenheimer for riding the rally.
The Analyst
Analyst Ittai Kidron named Nutanix Inc (NASDAQ: NTNX) as one of his top 2018 picks on the view that the market still underappreciates the company's shift to a software model.
Oppenheimer reiterated an Outperform on Nutanix with a 12-18 month price target of $43.
The Thesis
Nutanix' Dell/EMC relationship remains stable and the relationships with International Business Machines Corp. (NYSE: IBM) and Lenovo Group Limited (ADR) (OTC: LNVGY) are expanding, Kidron said, citing his firm's channel checks. (See the analyst's track record here.)
The company's exit from hardware removed channel friction while deploying Cisco Systems, Inc. (NASDAQ: CSCO) or Hewlett Packard Enterprise Co (NYSE: HPE), the analyst said. This could expand Nutanix' reach once sales are fully engaged, he said.
Nutanix is the leading hyperconverged infrastructure vendor, with only VMware, Inc. (NYSE: VMW) as a strongly positioned alternative. The move to a software-only model means Nutanix can highlight platform breadth; drive faster adoption of its products; and catalyze an eventual shift to more services and subscription offering, Kidron said.
"We believe this product breadth could make for a faster than expected software transition, bringing with it a quick reset to the hardware top-line adjustment and faster than expected gross margin increase," the firm said.
The Price Action
Shares of Nutanix are up more than 35 percent over the past year.
At the time of writing, the shares were down 2.04 percent at $37.62.
Related Links:
Nutanix Shares Getting Attention Following RBC Price Target Raise
Nutanix Gaining Traction Among Forbes Global 2000 Companies
Latest Ratings for NTNX
Nov 2017 | RBC Capital | Reiterates | Outperform | Outperform |
Nov 2017 | Needham | Initiates Coverage On | Buy | |
Nov 2017 | Wells Fargo | Initiates Coverage On | Outperform |
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