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On Thursday, Piper Sandler updated its outlook on Nutanix (NASDAQ:NTNX), increasing the price target to $88 from the previous $76 while maintaining an Overweight rating. Currently trading near its 52-week high at $78.87, with a market capitalization of $21 billion, the company has shown impressive momentum. The firm’s analyst pointed to the company’s third fiscal quarter results, which met expectations and marked the first clean quarter for Nutanix since FY21. According to InvestingPro data, analyst targets range from $73 to $100, suggesting further upside potential.
The analyst acknowledged a billings miss but attributed it to a misinterpretation by the market, explaining that the Street had misunderstood how revenue from prior large wins was recognized. The company maintains strong fundamentals, with InvestingPro data showing an impressive gross profit margin of 85.84% and healthy revenue growth of 14.82% over the last twelve months. The report highlighted that this was not indicative of a change in the investment thesis but rather a reaffirmation of confidence in Nutanix’s future free cash flow (FCF) estimates and the stabilization of the Net Revenue Retention (NRR) rate.
Nutanix’s recent quarter performance showcased strong momentum with new customer acquisitions, particularly in AHV and traditional HCI sectors. The company also benefits from a robust opportunity with VMware and continues to gain from its OEM partnerships. These factors contribute to the analyst’s positive stance on the stock.
The upgrade in the price target reflects Piper Sandler’s optimism about Nutanix’s growth trajectory and its potential to capitalize on multiple upcoming catalysts. The firm believes that the growth rates justify an increased valuation multiple for Nutanix.
The analyst’s commentary concluded that the recent financial results of Nutanix provide further assurance that the conservative estimates for out-year FCF are well-founded and that the company’s NRR is showing signs of stabilization, underpinning the raised price target.
In other recent news, Nutanix Inc . reported its third-quarter fiscal year 2025 earnings, which exceeded analysts’ expectations. The company announced earnings per share of $0.42, surpassing the forecast of $0.38, and reported revenue of $639 million, above the anticipated $594.44 million. This represents a 22% year-over-year increase in revenue. Nutanix also achieved a non-GAAP gross margin of 88.2% and added 620 new customers during the quarter. Strategic partnerships with companies like Dell (NYSE:DELL) and Cisco (NASDAQ:CSCO) are bolstering Nutanix’s market position. Despite these strong results, the stock experienced a minor decline in aftermarket trading. Looking ahead, Nutanix projects fourth-quarter revenue between $635 million and $645 million, with full fiscal year 2025 revenue guidance set at $2.52 to $2.53 billion, indicating a 17.5% year-over-year increase.
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