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  • Writer's pictureAbacus Research

Nutanix (NTNX)

Nutanix share price has suffered a large decline due to growth falling from ~40% to 0%. Although the market is currently questioning everything, our conclusion is Nutanix has a very strong position in IT infrastructure and hybrid cloud is a massive opportunity.

  • Revenue growth is at an inflection point. The next couple of quarters are critical in understanding the growth trajectory. Recent improvements give us confidence that underlying growth of ~25% is likely. Hence at current 2.6x 2021 sales, we find it an attractive investment.

  • Business model changes are transitory and not well understood, yet the quality of the business is high, with 80% GMs, 97% retention and an LTV/CAC of 12x.

We believe Nutanix is potentially a strategic asset for a number of large players providing downside protection.

Potential Upside: $47 (+70%)

Sensible Downside: $22 (-20%)

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