Nutanix (NTNX)
- Abacus Research
- Nov 11, 2019
- 1 min read
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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