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One Analyst Thinks Nutanix Is Undervalued Despite Growing Faster Than Peers

One Analyst Thinks Nutanix Is Undervalued Despite Growing Faster Than Peers
Goldman Sachs Adds Nutanix To Conviction List, Says Hardware Revenue Decision Is Misunderstood
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JMP Securities analyst Erik Suppiger thinks Nutanix Inc (NASDAQ: NTNX) shares, which are trading at 2.3 times his calendar year 2018 estimate, are undervalued. Since its listing last September, the stock has shed 43 percent.

As such, Suppier maintained his Market Perform rating and $35 price target on Nutanix. The analyst clarified that his price target represented 4.3 times his estimated sales for calendar year 2018, a slight discount to peers even as the company is growing 22 percent faster than peers.

The view was expressed in the wake of the company adopting the new standards around software license revenue recognition, one of the first in the technology sector to do so.

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JMP Securities stated that Nutanix restated its financial statements in accordance with accounting rule ASC 606. This, according to the firm, would change the revenue recognition methodology and in turn the earnings, although not materially impacting billings or cash flows. The change doesn't alter the fundamentals.

The ASC 606: Revenue From Contracts With Customers rule is an accounting standard issued by the Financial Accounting Standards Board, or FASB. Public companies reporting under US GAAP are required to adopt this standard latest by the quarter beginning in January 2018.

As against the current diverse methods companies adopt to recognize revenues, the new standard serves to standardize the revenue recognition method by mandating that revenues be recognized when goods and services are transferred to the customer, in an amount that is proportionate to what has been delivered at that point.

Latest Ratings for NTNX

Feb 2018Goldman SachsInitiates Coverage OnBuy
Jan 2018JP MorganDowngradesNeutralUnderweight
Nov 2017RBC CapitalReiteratesOutperformOutperform

View More Analyst Ratings for NTNX
View the Latest Analyst Ratings

Posted-In: Erik Suppiger JMP SecuritiesAnalyst Color Reiteration Analyst Ratings Best of Benzinga


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