Market Overview

Nutanix Turnaround Delayed By Demand Slowdown, Morgan Stanley Says In Downgrade

Nutanix Turnaround Delayed By Demand Slowdown, Morgan Stanley Says In Downgrade

While poor results from storage companies indicate a market slowdown, recent Morgan Stanley channel checks highlight stiffening competition.

Given this backdrop, the turnaround at Nutanix Inc (NASDAQ: NTNX) could be delayed by two to three quarters, the sell-side firm said in a Tuesday downgrade note. 

The Analyst

Katy Huberty downgraded Nutanix from Overweight to Equal-Weight and reduced the price target from $53 to $37.

The Thesis

Although Nutanix's Essentials and Enterprise software offerings are differentiated from its storage peers and face a clearer TAM expansion opportunity, the cyclical slowdown of demand and competition from Dell Technologies Inc (NYSE: DELL) suggests a full recovery could take several quarters, Huberty said in the downgrade note. (See her track record here.) 

Enterprise hardware peers Pure Storage Inc (NYSE: PSTG), NetApp Inc. (NASDAQ: NTAP) and Hewlett Packard Enterprise Co (NYSE: HPE) missed on April quarter revenue, while their full-year revenue estimates have been lowered by 2-5 percent, the analyst said. This suggests risk to Nutanix's outlook, she said. 

Following a channel call hosted by Morgan Stanley, Huberty said competition seems to be a bigger issue than was earlier believed, adding that rising competition and slowing market growth are concerns.

Morgan Stanley reduced its calendar 2019 revenue estimate for Nutanix from $1.47 billion to $1.414 billion to reflect normal July quarter seasonality.

Price Action

Nutanix shares were down 10.6 percent at $31.41 at the close Tuesday. 

Related Links:

Jefferies: Reward Potential In Nutanix Outweighs The Risk

Analysts React To Nutanix's Broad Pipeline, Target Delay

Latest Ratings for NTNX

Aug 2019ReiteratesBuy
May 2019MaintainsEqual-Weight
May 2019ReiteratesBuy

View More Analyst Ratings for NTNX
View the Latest Analyst Ratings

Posted-In: Katy Huberty Morgan StanleyAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (DELL + HPE)

View Comments and Join the Discussion!

Latest Ratings

WUBABOCOM InternationalDowngrades
DLTROTR GlobalUpgrades
ARCCCompass PointDowngrades
GTYHCitiInitiates Coverage On7.0
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

How Should Facebook Approach Free Speech On Its Platforms?

8 Money Magazines To Read At The Beach