Nutanix shares rise 25.1%, outlook shows mixed signals

Nutanix shares enjoy a 25.1% increase but face uncertainties. Investors should consider NTNX's strong positioning and partnerships, yet be cautious of elongated sales cycles impacting revenue growth amid a challenging macroeconomic environment.

Date: 16-01-2025

AI Rating: 6

Nutanix Performance
Nutanix (NTNX) shares have shown impressive growth, gaining 25.1% over the past six months, significantly outperforming the broader Computer and Technology sector and specific industry peers like DXC Technology and TaskUs. This performance is attributed to Nutanix's strong market position and innovative product offerings related to multi-cloud IT modernization, enhancing their appeal to organizations.

Revenue Growth and Guidance
For fiscal 2025, Nutanix expects revenues in the range of $2.435 billion to $2.465 billion, indicating a year-over-year growth of approximately 14% at the midpoint. The Zacks Consensus Estimate aligns closely, predicting $2.46 billion in revenues for fiscal 2025, translating to a growth rate of 14.5%. The anticipated revenue growth for fiscal 2026 is even more optimistic, projected at $2.84 billion, reflecting a 15.56% increase.

Earnings Estimates
Nutanix has a consensus estimate for fiscal 2025 earnings set at $1.49 per share, which denotes a year-over-year growth rate of 13.74%. The fiscal 2026 earnings estimate is positioned at $1.86 per share, representing a growth of 25.19%. Notably, Nutanix has consistently beaten earnings expectations over the past four quarters, with an average surprise of 48.45%, indicating its ability to exceed performance targets.

Challenges Ahead
Despite these positive indicators, Nutanix faces challenges stemming from a volatile macroeconomic environment, which has lengthened typical sales cycles as IT spending becomes more scrutinized. The necessity for higher-level approval on larger opportunities could adversely affect deal closures and, consequently, revenue growth trajectories.

Investor Outlook
While the strong partnerships, especially with AWS, and a robust product portfolio position Nutanix well, the mixed guidance regarding longer sales cycles should make investors cautious. The current Zacks Rank of #3 (Hold) suggests that it may be beneficial for investors to await a more favorable entry point for Nutanix stock.

Stocks: NTNX AMZN DXC TASK