Nutanix: Tech IT and Hyperconvergence
08/24/2017 2:56 am EST
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 BullMarket.com.
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.