Nutanix Could Move 25% Higher As Management Goes Hunting For Larger Accounts

Pacific Crest sees 25 percent potential upside in Nutanix Inc NTNX shares as management is pushing into Global 2000 accounts, which is less than 20 percent penetrated (376 customers).

The brokerage projects Global 2000 account for greater than 70 percent of traditional IT spending. Pacific Crest noted that Global 2000 follow-on spending with Nutanix is 2x greater than in the rest of the business, with the Global 2000 spending 7.3x per initial $1 spent with Nutanix versus the corporate average at 3.9x.

Additional Analyst Expectations

“We see Nutanix as a highly differentiated platform relative to its core competitor in VMware, attacking a well-established $12 billion TAM for integrated systems,” analyst Alex Kurtz wrote in a note.

Further, Nutanix benefits by competing within the well-established $10 billion integrated systems and reference architecture market versus other emerging technologies in the data center market that is yet to gain traction.

In addition, the company's core competitor, VMware/EMC, is faced with several constraints that is expected to benefit Nutanix over time.

“As we understand it, today VMware's VSAN only works as a component within ESX and does not actively support multi-hypervisor environments (not the longer-term trend within today's data center, in our view),” Kurtz continued.

As such, the analyst believes Nutanix business should be able to sustain 30 percent plus growth with growing channel distribution and an expanding OEM model.

Kurtz has an Overweight rating on Nutanix shares, with a price target of $38. This represents a potential upside of 25 percent over Friday’s close.