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Nutanix has a promising multilever growth story, according to Bank of America. Analyst Wamsi Mohan upgraded shares to buy from neutral. He also increased his price target to $50 from $39, suggesting 48.1% upside potentially from Wednesday’s close. “We see fundamentals improving over the next few years including ACV billings, revenue, and operating margin. We 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,” Mohan said in a Thursday note. Nutanix, which offers cloud services and software solutions, recently announced a new software-defined platform called ” GPT-in-a-Box. ” The product is designed to simplify adoption of generative AI while allowing companies to maintain control over their data. Nutanix is also partnering with Cisco, which Mohan believes will help drive growth. The partnership will combine “the Nutanix cloud platform with Cisco’s UCS compute, cloud management, networking and security,” said the analyst. “NTNX will benefit from Cisco’s extensive go-to-market reach as it sells NTNX’s hybrid multi-cloud software.” Mohan thinks the company could also benefit from Broadcom’s upcoming acquisition of cloud computing peer VMware. If Broadcom chooses to limit its focus to VMware’s largest customers, this could allow Nutanix to gain market share through other customers, said Mohan. Ahead of the company’s analyst day later this month, Mohan thinks Nutanix can exceed Wall Street consensus estimates. However, he cited risk factors such as increased competition from established names such as Dell and HP Enterprise, as well as lackluster improvement at larger accounts. Shares jumped 2.8% on Thursday before the market open. The stock has rallied nearly 30% year to date. — CNBC’s Michael Bloom contributed to this report.
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