Market Overview

Susquehanna Downgrades Nutanix, Projects Profitability — In 2022

Share:
Susquehanna Downgrades Nutanix, Projects Profitability — In 2022

Nutanix Inc. (NASDAQ: NTNX) was hit with a downgrade Monday, with Susquehanna citing increased competition and a hazy reception to its subscription model.

The Analyst

Susquehanna analyst Mehdi Hosseini downgraded Nutanix from Neutral to Negative and lowered the price target from $55 to $33.

The Thesis

Nutanix is well-positioned with a model transformation that has driven strong growth, Hosseini said in the note. (See his track record here.) 

“Multiple expansion of the past year has reflected this, though [the] BE goalpost is pushed out. In our view, the next phase of transformation — vertical integration to become a second source to VMWare, Inc. (NYSE: VMW) — will take longer than expected, while the more opex/more growth approach may not yield enough growth acceleration to become profitable anytime soon.”

Hosseini praised the software company for altering its course since the initial public offering, but said its fundamentals should prove challenging going forward due to the following reasons: 

  • The company’s original equipment manufacturer relationships becoming less impactful.
  • An unclear reception for the subscription model as Nutanix competes with peer license models. 
  • An expected Dell initial public offering, which should block entry for any new competitor.
  • “Don't count Microsoft Corporation (NASDAQ: MSFT) out of the HCI game, and we would not be surprised to see a more concerted push around Storage Spaces Direct (as part of Windows 19 refresh).”

Price Action

Nutanix shares were down 7.64 percent at $42.90 at the time of publication Monday. 

Related Links:

Sell-Side Largely Bullish On Nutanix After Q4 Report, Undeterred By Disappointing Guidance

JPMorgan Upgrades Nutanix Ahead Of Q4 Report, Sees Balanced Risk-Reward Profile

Latest Ratings for NTNX

DateFirmActionFromTo
Sep 2019UpgradesNegativePositive
Aug 2019MaintainsOutperform
Aug 2019MaintainsEqual-Weight

View More Analyst Ratings for NTNX
View the Latest Analyst Ratings

Posted-In: cloud computing DELL Lenovo Mehdi HosseiniAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (MSFT + NTNX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
NEWCitiUpgrades
BKNGConsumer Edge ResearchInitiates Coverage On2,250.0
EXPEConsumer Edge ResearchInitiates Coverage On100.0
TRIPConsumer Edge ResearchInitiates Coverage On26.0
IAreteInitiates Coverage On39.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

42 Stocks Moving In Monday's Mid-Day Session

Mid-Day Market Update: Dow Falls 150 Points; Amarin Shares Spike Higher