Aug. 14, 2017 7:21 AM • NTNX Summary Ever since popping more than 2x in its September 2016 IPO, Nutanix shares have fallen by the wayside, as investors seem to ignore its massive growth and market-leading position. Right now, Nutanix is being comped against commodity storage providers with little IP, bearing a low valuation that doesn't give it credit for its extremely differentiated hyperconverged software. Contrary to popular belief, Nutanix is well-guarded from cannibalization from cloud vendors, as its private cloud approach makes the Nutanix platform marketable to a different set of customers. Nutanix has ample room for long-term growth as a distinguished leader in a greenfield market with few viable alternatives. The stock offers beaten-down value in an otherwise expensive market with crowded tech trades. #Nutanix (NASDAQ:NTNX) is a puzzle for most investors, both from a technical and investment perspective. It's not exactly a low-margin hardware company that manufactures boring chips and peripherals, but neither is it a recurring revenue software company with monthly #SaaS billings. Its valuation and trading multiples seem to reflect the prevailing narrative of the day - immediately after its IPO, as investors bid shares up to the mid-$40s, the market saw it as a revolutionary software product with enviable growth. Then, the shares crashed below $20, as investors increasingly began to focus on the commodity hardware component and its position in a decidedly unattractive segment of IT, storage. Indeed the market has not been receptive to storage technology plays, punishing #Tintri (NASDAQ:TNTR) and having long forgotten about its older cousins #Pure Storage (NYSE:PSTG) and #NetApp (NASDAQ:NTAP). But #Nutanix is not just any #flashstorage vendor like the rest, selling legacy solutions to cram more data into inefficient datacenters. Nutanix was the first company to commercialize the idea of #hyperconvergedinfrastructure (a technique long used internally by #Google (NASDAQ: #GOOG) (NASDAQ: #GOOGL) and #Facebook (NASDAQ: #FB ) to manage big #datasets internally), which applies highly advanced software running on cheap commodity hardware to turn standard datacenters into lean, modern workhorses capable of handling the immense challenges posed by #BigData and the associated spikes in IT workloads. Nutanix's thought leadership in revolutionizing the datacenter - through software, not hardware - has won it the love of customers as well as monstrous revenue growth, up nearly 2x in the last fiscal year. The company is on pace to reach $750mm in revenues this year (it reports Q4/FY17 results on August 30), and is likely on track to reach >$1bn in revenues next year, a staggering scale for a company whose market cap is still a polite $3.3bn. Nutanix is king of the so-called "private cloud", addressing a large (~$100bn) market currently littered with ancient legacy technology. With less than 1% of this market's current spend, Nutanix is just getting started. IT leaders are increasingly under pressure to upgrade their systems to whatever is new and exciting, as IT increasingly becomes a C-suite agenda item and a magnet for headlines. #Nutanix is the undisputed "cool kid" in a stagnant arena of decidedly unsexy names: #Dell, #HP (NYSE: #HPE ), #Cisco (NASDAQ: #CSCO ), #EMC, #VMware (NYSE: #VMW ), and the like. Nor is Nutanix subject to direct competition from #publiccloud vendors such as #Amazon (NASDAQ: #AMZN ) #AWS or #Microsoft (NASDAQ: #MSFT) #Azure. Public cloud serves a different set of use cases (namely, noncore workloads and adjunct applications involving minimal critical or private data), and large enterprises desiring security and control turn to Nutanix's private cloud solution to re-jigger the bulk of their datacenters. A large part of the valuation error in Nutanix's decline is due to the mistaken belief that Nutanix is a non-cloud (and therefore, non-growth) vendor - a few more quarters of outperformance should show investors that this is not the case.
https://seekingalpha.com/article/4098579-nutanix-revisited-depth-look-private-cloud-leader-ripe-comeback
No comments:
Post a Comment