KeyBanc Raises Nutanix Price Target As Cloud Computing Company Nets European Contracts

Nutanix Inc NTNX's total addressable market has increased over the past 12 months, especially for large greenfield data center builds in Europe, according to KeyBanc Capital Markets. 

The Analyst

KeyBanc analyst Alex Kurtz maintained an Overweight rating on Nutanix shares and increased the price target from $44 to $52.

The Thesis

KeyBanc's proprietary RFP database highlighted Nutanix's entrance into $3 million-plus projects against traditional incumbent vendors, Kurtz said in a Thursday note. The database details growth in the company's revenue share in the EU. 

KeyBanc raised its Nutanix estimates on the basis of the cloud computing company's average selling price expansion 

The maturation of the Nutanix Enterprise Cloud Platform and the shift to an all-software model are driving the ASP expansion, Kurtz said. 

The move to an all-software model is enabling larger, direct transactions with customers that can now more easily scale their spending on Nutanix nodes, the analyst said. 

KeyBanc projects 30-percent year-over-year gross profit growth in 2019, up from a prior estimate of 28 percent, while it maintains a 26-percent growth rate estimate for 2020.

"We see an upward bias to estimates given NTNX's ability to reach into larger pools of traditional database project dollars, now aided by a software procurement model," Kurtz said. 

Nutanix is likely to give an update on software activity at its analyst day Monday, according to KeyBanc. 

The Price Action

Nutanix shares have more than doubled over the past year.

At the time of writing, the shares were rallying 6.07 percent to $49.13.

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