Needham & Company analyst Richard Kugele reiterates Buy rating and $36 price target on Nutanix (NASDAQ: NTNX), noting challenges due to sales changes, as the company reported record fiscal second quarter results, despite lower guidance.

Kugele comments, "It's easy for investors and the Street to be distracted by lower guidance when it involves disruptive hypergrowth companies like Nutanix. However, we believe the issues weighing on F3Q guidance (changes in sales leadership impacting deals >$500K and DRAM pricing) and should not impact the company long term. NTNX remains extremely well run, in our view, and is strategically positioned to continue to innovate their cloud OS platform further into bringing cloud economics and features to the on-prem/hybrid world. Further, NTNX reiterated its plan to achieve SUSTAINED FREE CASH FLOW by the end of C2017, removing a prime concern of investors. We reiterate our Buy and $36 target and believe investors should use any guidance-driven pullbacks to build or add to positions in the name."

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Shares of Nutanix closed at $31.12 yesterday.