EU and US could reach trade deal this weekend - Reuters
On Thursday, Piper Sandler increased its price target for Nutanix (NASDAQ:NTNX) shares from $83.00 to $88.00, while maintaining an Overweight rating on the stock. The adjustment followed a significant after-hours stock price increase of over 10%, triggered by Nutanix’s strong performance indicators, including accelerated annual recurring revenue (ARR) and billings, sales growth, and a rising contribution from VMware (NYSE:VMW) among large customers. The company, currently valued at $18.58 billion, has demonstrated impressive revenue growth of 14.86% and maintains strong gross profit margins of 85.44%. Additionally, the company reported improvements in free cash flow (FCF), stabilization in net revenue retention (NRR), and other positive developments. According to InvestingPro analysis, while the stock appears overvalued against its Fair Value, analysts maintain a bullish consensus with price targets ranging up to $100.
The analyst at Piper Sandler highlighted that the recent financial results represented a "very ’clean quarter’" with many positive aspects to acknowledge. The firm’s optimism is fueled by several factors, including gains in market share from VMware, new AHV-OEM partnerships, the ongoing relationship with Cisco (NASDAQ:CSCO), and the availability of Dell (NYSE:DELL) Powerflex. These elements are believed to support an expected acceleration in the second half of the fiscal year. Piper Sandler’s analysis, based on recent record checks, suggests that the updated guidance from Nutanix may be conservative, particularly regarding a minimal fiscal Q4 quarter-over-quarter increase and a cautious operational expenditure forecast. This conservative stance is anticipated to contribute to further free cash flow upside and bolster confidence in achieving over $900 million in FCF by fiscal year 2027. InvestingPro data reveals that Nutanix has already generated significant free cash flow of $617.15 million in the last twelve months, with additional metrics and insights available in the comprehensive Pro Research Report.
Despite the positive outlook, some caution is advised for fiscal Q3 due to issues encountered in the past few years. Nevertheless, with financial metrics trending upward, including a strong six-month price return of 30.36% and expectations of profitability this year, Piper Sandler has reiterated its confidence in Nutanix by reaffirming the company as its top pick, citing sustained growth and the presence of catalysts that should continue to drive the company’s performance. For deeper insights into Nutanix’s financial health and growth prospects, access the full suite of analytical tools and expert analysis available on InvestingPro.
In other recent news, Nutanix has reported its financial results for the second quarter of fiscal year 2025, surpassing revenue expectations with $655 million, compared to the anticipated $641.5 million. The company posted earnings per share of $0.46, slightly below the forecast of $0.47. Analysts at Needham and Raymond (NSE:RYMD) James have responded positively, with Needham raising its price target for Nutanix shares to $92 and maintaining a Buy rating, while Raymond James increased its target to $83, reiterating an Outperform rating. These changes reflect confidence in Nutanix’s strategic positioning and growth potential, especially after the company’s strong performance in securing new customer deals and partnerships. Nutanix’s management has highlighted the company’s success in the Global 2000 segment and its expanding market share, particularly in AI and hybrid cloud solutions. Additionally, the company’s Annual Recurring Revenue (ARR) grew by 19% year-over-year, indicating robust demand and effective sales strategies. Nutanix’s guidance for the third quarter of fiscal year 2025 also exceeded consensus expectations, contributing to the favorable outlook from analysts.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.