Nutanix (NTNX) stock rose in high volume Wednesday as one analyst put out a bullish report on the provider of cloud computing data center technology.
“We think Nutanix will increasingly pivot away from bundled hardware/software sales and focus on higher gross margin software-only sales,” said Matthew Hedberg, a RBC Capital analyst in a report.
“While this could take time and isn’t without risk, we think the result will be a more predictable and profitable model with a comp group that looks more like software companies, such as Palo Alto Networks (PANW), VMware (VMW) or Red Hat (RHT).”
The RBC Capital analyst has an outperform rating with a price target of 34.
Nutanix gained 2.3% to 26.20 on the stock market today, and is about even for 2017. On Tuesday, Nutanix climbed into buy territory, going above a buy point of 24.97, coming out of failed breakout from a flat base.
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Nutanix’s software manages network, storage and server infrastructure in private cloud computing platforms, an emerging market called “hyperconvergence.”
Most revenue comes from Nutanix-branded appliances, but the company’s sales mix is shifting to software that runs on partner hardware. Hardware partners include Dell Technologies (DVMT), Lenovo and IBM (IBM).
Nutanix went public at 16 per share on Sept. 30, 2016, raising $238 million. The stock peaked in its second day of trading, at 46.78. It hit a low of 14.46 on May 1.
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