Nutanix
NTNX
is one of the stocks that investors can currently add to their portfolio to counter the highly volatile market conditions and benefit from its upside potential.
Wall Street continues to witness high volatility due to the vicious macro challenges, ranging from the Covid-led supply crisis and war in Ukraine to the rising inflation and interest rate pressures. With the continued fear of the impact of Federal Reserve’s aggressively raising interest rate policy, global investors are panicking about getting into the market right now.
All major stock indices are in negative territory year to date. The Dow Industrial, Nasdaq and S&P 500 have plunged 9.5%, 34.7% and 20.6%, respectively, in the year to date. In such a scenario, top-ranked stocks like Nutanix can boost one’s portfolio.
Nutanix Price and Consensus
Why NTNX is an Attractive Pick?
An Outperformer
: A glimpse at NTNX’s price trend reveals that the stock has gained 75% in the past six months, outperforming 3.1% loss of the
Zacks Computer – IT Services
industry. Year to date, shares of the company plunged 19.6%, outperforming the industry’s decline of 34.3%.
Trading Way Below 52-Week High
: Nutanix stock currently trades lower than its 52-week high, which reflects its potential to go upward. The stock’s closing price of $25.60 on Dec 28 was 24% lower than the 52-week high of $33.73 attained on Dec 14, 2022.
Attractive Valuation
: NTNX currently trades at an attractive valuation multiple. The stock trades at one-year forward price-to-sales multiple of 3.13X compared with its five-year average of 4.06X.
Solid Rank & Growth Score
: Nutanix currently has a Zacks Rank #2 (Buy) and a
VGM Score
of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities to investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions
: The direction of estimate revisions serves a key role when it comes to the price of a stock. Analysts have raised the estimates for Nutanix’s fiscal 2023 and fiscal 2024 over the past 30 days, reflecting their confidence in the company. Over the past 30 days, consensus mark for fiscal 2023 and fiscal 2024 earnings moved north by 4 cents and 3 cents, respectively.
Positive Earnings Surprise History
: Nutanix has an impressive earnings surprise history. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 86.1%.
Strong Growth Prospects
: The Zacks Consensus Estimate of 17 cents per share for fiscal 2023 earnings suggest growth of 137% from the year-ago loss of 46 cents. For fiscal 2024, earnings are expected to increase 168.6% year over year and are likely to reach 46 cents per share.
Robust Fundamental Growth Drivers
: Nutanix is benefiting from the solid adoption of its hybrid cloud solutions and an expanding clientele. The company is considered a pioneer of the hyper-converged infrastructure market, which is projected to grow rapidly in the long term. Gartner recognized the software maker as a 2022 Gartner Peer Insights Customers’ Choice vendor for HCI for the fourth time.
Strong adoption of Nutanix products and a high customer satisfaction rate are helping the company to expand its customer base. The company’s built-in hypervisor has been gaining significant traction as customers continue to select it as a low-cost alternative to other vendor offerings. Nutanix’s cloud-based deployment strategy is a differentiator. The company’s Xi Cloud Services is expected to challenge AWS, Microsoft Azure and Google Cloud in the infrastructure-as-a-service market.
Nutanix’s growing recurring revenue stream reflects customer loyalty to its solution portfolio, which improves the visibility of its revenue growth trajectory. During the first-quarter fiscal 2023 earnings release, the company added 530 new customers, bringing the total client number to 23,130. Further, the company’s transition to software-only sales is expected to significantly boost gross margin. In first-quarter, non-GAAP gross margin expanded 130 basis points year over year to 83.4%.
The San Jose, CA-based company reported revenues of $433.6 million in the fiscal first-quarter. Subscriptions, Non-Portable Software, Hardware and Professional Services accounted for 92.9%, 1.8%, 0.1% and 5.1% of revenues, respectively, in the reported quarter. Its remarkable transformation journey from a loss-making company to more of a high-growth recurring revenue-generating firm has made it a lucrative
takeover
target recently.
Other Key Picks
Some top-ranked stocks from the broader
Computer and Technology
sector are
AudioCodes
AUDC
,
Fabrinet
FN
and
Zscaler
ZS
. While AudioCodes sports a Zacks Rank #1, Fabrinet and Zscaler carry a Zacks Rank #2. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
The Zacks Consensus Estimate for AudioCodes’ fourth-quarter 2022 earnings has been revised 4 cents north to 39 cents per share over the past 60 days. For 2022, earnings estimates have moved south by a penny to $1.39 per share in the past 60 days.
AUDC’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the rest, the average surprise being negative 5.4%. Shares of the company have declined 50.2% in the year to date.
The Zacks Consensus Estimate for Fabrinet’s second-quarter fiscal 2023 earnings has been revised 16 cents northward to $1.89 per share over the past 60 days. For fiscal 2023, earnings estimates have improved by 7.6% to $7.48 per share in the past 60 days.
FN’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed the same once, the average surprise being 5.4%. Shares of the company have risen 6.5% in the year to date.
The Zacks Consensus Estimate for Zscaler’s first-quarter fiscal 2023 earnings has been revised 3 cents north to 29 cents per share over the past 30 days. For fiscal 2023, earnings estimates have moved north by 6 cents to $1.23 per share in the past 30 days.
ZS’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 66.4% in the year to date.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
