Street's High Estimates Could Be A Risk To Nutanix, Raymond James Says - Nutanix (NASDAQ:NTNX)

Shares of Nutanix Inc NTNX are at risk from a number of factors, including the Street’s optimistic expectations, the state of the sales pipeline and the possibility of higher expenses, according to Raymond James.

The Analyst

Raymond James’ Simon Leopold downgraded Nutanix from Outperform to Market Perform.

The Thesis

The cloud computing software company projected April quarterly sales of $290-$300 million, short of consensus expectations of $348 million. The company said its sales pipeline had been impacted by imbalances in lead generation spending, Leopold said in the Monday downgrade note.

New customer bookings were 25 percent of quarterly bookings, significantly lower than 35 percent in the prior quarter, the analyst said, adding that he expects the company to increase spending on sales and marketing to improve the pipeline.

Nutanix's conference call did not provide enough details on the “reasons and repercussions” behind the weak forecast, Leopold said. While adding that management does not consider the softness as indicative of either a weaker market or an increase in competition, “several reports might suggest otherwise,” he said.

Raymond James revised its FY19 estimates for sales and the non-GAAP loss per share from $1.268 billion to $1.273 billion and from a loss of $1.54 to a loss of $1.56, respectively, versus consensus expectations of $1.291 billion and a $1.39 loss.

Price Action

Nutanix shares were down 1.85 percent at $33.08 at the time of publication Monday.