On Wednesday, Nutanix (NASDAQ:NTNX) received an upgrade from Raymond James, shifting from Market Perform to Outperform, with a new price target set at $72.00. The upgrade is attributed to a growing confidence in Nutanix's potential to capture market share from VMware (NYSE:VMW), particularly after VMware's acquisition by Broadcom (NASDAQ:AVGO).
The analyst from Raymond James noted that Broadcom's strategies for enhancing VMware's growth and performance have included bundling and implementing price increases that were higher than anticipated. This move is expected to drive some customers to look for alternatives, benefiting Nutanix.
These changes come as the industry observes the competitive dynamics between virtualization and hyper-converged infrastructure (HCI) providers.
The report highlighted that due to the inherent 'stickiness' of virtualization and HCI platforms, customer transitions might span several years. Despite this gradual shift, the analyst's outlook on Nutanix has improved, leading to an increased price target.
The new price target of $72.00 reflects a significant increase in valuation for Nutanix. The analyst's comments suggest that the revised estimates and positive outlook are based on the belief that Nutanix stands to gain from the current market situation.
Nutanix, a company specializing in cloud software and hyper-converged infrastructure solutions, is poised to take advantage of the market shifts as customers evaluate their options in the face of VMware's pricing strategy adjustments. The upgrade by Raymond James marks a positive development for Nutanix in the competitive tech landscape.
InvestingPro Insights
Following the optimistic assessment by Raymond James, current InvestingPro data and tips provide a more comprehensive picture of Nutanix's (NASDAQ:NTNX) financial health and market performance. With a robust revenue growth of 18.12% over the last twelve months as of Q2 2024, and an impressive gross profit margin of 83.85%, the company’s financials reflect a strong potential for capturing market share. The market has responded positively to Nutanix's strategy and potential, as indicated by a significant 71.53% price uptick over the last six months, and a stellar one-year price total return of 166.29%.
InvestingPro Tips highlight that analysts are predicting Nutanix will be profitable this year, which is a crucial turnaround considering the company was not profitable over the last twelve months. Additionally, 11 analysts have revised their earnings upwards for the upcoming period, signaling growing confidence in the company's financial trajectory. For investors seeking more detailed analysis and additional InvestingPro Tips, there are 12 more tips available that could offer further insights into Nutanix's performance and outlook. To access these, visit the InvestingPro platform for Nutanix at https://www.investing.com/pro/NTNX.
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