Nutanix Set To Outperform With Strong FCF And Hybrid Cloud Focus, Despite Macro Challenges: Analyst

Several analysts raised price targets on Nutanix Inc NTNX after it reported better-than-expected Q4 FY23 earnings. 

The company reported a revenue increase of 28% Y/Y to $494.21 million, which beat the consensus estimate of $475.16 million, and adjusted EPS of $0.24, which beat analyst estimates of $0.16.

The company sees fiscal first-quarter revenue of $495 million- $505 million versus estimates of $487.22 million. The company expects full-year revenue to be $2.085 billion-$2.115 billion versus estimates of $2.08 billion.

Nutanix's board also authorized a share repurchase program of up to $350 million. 

Related: Nutanix Analysts Raise Their Forecasts After Strong Results

KeyBanc Capital Markets analyst Thomas Blakey increased the price target to $45 from $35 and maintained an Overweight rating.

The analyst sees Nutanix's value proposition as increasing, mainly due to an increased focus on hybrid cloud architectures and related cost optimization.

Blakey expects available-to-renew (ATR) business to increase as a percentage of revenue in FY24 and beyond, boosting margins and the possibility of a mix shift to FY25 on the timing of the contracts.

The analyst is also bullish on Nutanix's global strategic partnership with Cisco Systems Inc CSCO related to simplifying hybrid multi-cloud and boosting business transformation. 

The analyst revised estimates for revenue to $2,105.2 million (vs. consensus $2,076.2 million) from $2,109.8 million and EPS to $1.10 (from $1.17) for FY24 and expects revenue and EPS of $2,413.2 million (vs. consensus $2,345.6 million) and $1.61, respectively, for FY25.

Needham analyst Mike Cikos raised the price target to $44 from $33 and maintained a Buy rating.

The analyst sees management's tone and positive talking points as a tailwind, given the impending Investor Day in late September.

Cikos increased the revenue and EPS estimates to $2,107.6 million (from $2,058.8 million) and $0.77 (from $0.72) for FY24 and $2,392.3 million (from $2,337.4 million) and $1.08 (from $0.83) for FY25. 

RBC Capital Markets analyst Matthew Hedberg upped the target to $43 from $38 and reaffirmed an Outperform rating.

The analyst thinks the quarterly result was again impressive, highlighted by outperformance in ACV billings/revenue and strong FCF, despite the challenging macro environment. 

The analyst raised estimates for revenue and adjusted EPS to $2,100.0 million (from $2,055.0 million) vs. consensus at $2,073.2 million and $0.86 (from $0.58) for FY24 and $2,342.0 million (from $2,302.0 million) and $1.05 (from $0.77) for FY25. 

On the other hand, JMP Securities analyst Erik Suppiger maintained a Market Outperform rating and a price target of $35.

The analyst expects revenue and EPS of $2.114 million (vs. consensus of $2.080 million) and $1.04 (consensus: $0.74), respectively, for FY24. 

Also, Raymond James analyst Simon Leopold maintained the Market Perform rating.

The analyst raised estimates for FY24 revenue and Adjusted EPS to $2,103 million (from $2,045 million) and $0.85 (from $0.72) and FY25 estimates to $2,385 million (from $2,372 million) and $1.06 (from $1.00), respectively.

Price Action: NTNX shares are trading higher by 12.54% at $35.00 on the last check Friday.