Susquehanna Remains Sidelined on Nutanix (NTNX) - PT to $29

November 30, 2016 7:55 AM EST
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Price: $30.46 +0.96%

Rating Summary:
    10 Buy, 7 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Susquehanna reiterated a Neutral rating on Nutanix (NASDAQ: NTNX), and raised the price target to $29.00 (from $24.00), following the company's 1Q earnings report. Management noted that its stronger top-line results were driven by stronger than expected Federal business.

Analyst Mehdi Hosseini commented, "We came away encouraged with NTNX's strong October-quarter top-line results and January-quarter guide - as well as promising cash flow dynamics; however, we remain Neutral at current levels given the confluence of appropriate valuation, potential risk from an intensifying competitive environment and the prospect of a de-emphasized Dell OEM relationship combined with NTNX's aggressive opex strategy. Key takeaways from the call include: 1) strong Federal business contributed to the upside, but this was more a function of seasonal fiscal year-end buying, and as such, is likely not to continue into the January quarter, 2) Global 2000 Enterprise customer growth slowed on a Q/Q basis relative to the prior two quarters, but we do not view this as a concern at this juncture, given NTNX's focus on expanding wallet share with existing customers (vs. new customer additions), as well as some changes by Forbes in the yearly update to its G2000 list, 3) on an overall employee basis, sales productivity appears to be moderating (flat Q/Q), but we note that this is likely a function of the maturation of the sales force, as well as non-sales hiring in the quarter, and 4) cash generation was impressive (operating cash flow positive for fourth straight quarter), and management remains confident in delivering positive FCF exiting CY17. We are slightly raising our FY17/FY18/FY19 revenue to $732M/$982M/$1,270M vs. our prior estimates of $715M/$968M/$1,258M, and given our modified share count assumptions, we are raising our price target to $29, which reflects the sum-of-the-parts valuation on NTNX's CY20 Hardware, Software, and Services revenue discounted to CY17."

For an analyst ratings summary and ratings history on Nutanix click here. For more ratings news on Nutanix click here.

Shares of Nutanix closed at $34.09 yesterday.

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