Nutanix: Tech IT and Hyperconvergence

08/24/2017 2:56 am EST


Todd Shaver

Founder and Editor-in-Chief,

Nutanix (NTNX) is a winner that just hasn’t been realized yet. Indeed, if it had been discovered, the stock would be at $40 or higher, which is where is ought to be, asserts Todd Shaver, editor of

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Firsthand Technology Value Fund has disclosed that Nutanix is one of its top five positions. The fund is a small fund — $140 million — but they have put 7% of the entire fund into Nutanix. That’s $10 million.

Nutanix is a provider of hyperconverged data center equipment that merges computing, storage, and networking capabilities in a single piece of equipment.

More businesses are looking to adapt the technology, with 18% of chief information officers saying they expect to move to hyperconverged systems in the next two years, according to a survey by Goldman Sachs.

Goldman added the stock to their conviction list, saying it has an estimated 50% return potential to their $31 price target.

Last quarter Nutanix said it gained 800 new customers, with 20 global companies buying more than $1 million in hardware or software.

The larger deals helped push overall sales growth to 67%. The company got some big name wins in the quarter, including corporate giants such as Caterpillar (CAT), Kyocera (KYO), Société Générale (SCGLY) and Sprint (S). One undisclosed customer win was a retailer with $50 billion in sales in the U.S.

The company’s leadership in the space, including the combination of hardware and software it offers, makes it a “once-in-a-decade tech infrastructure story,” wrote Goldman. They see Nutanix on a path for long-term double-digit growth, high gross margins and large operating leverage.

Despite its leadership in the space, the stock is down 15% year-to-date. “The stock drop and Nutanix’s unique position in the space, however, make it a prime acquisition target,” Goldman said. We like this company and would add that growth in revenues always wins out in the end.

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