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Nutanix (NTNX) Looks Bright Post Q1 Earnings: Time to Buy?


A successful investor understands the importance of retaining well-performing stocks in the portfolio at the right time. Indicators of a stock’s bullish run include a rise in share price and strong fundamentals.

Nutanix Inc. NTNX is one such technology stock that has been on healthy growth trajectory, of late. It has rallied 83.3% for the past six months, outperforming 12.7% growth recorded by the industry it belongs to.

Let’s delve deeper and take a look at some of the aspects aiding the company’s performance.

Upbeat Q1 Results

Though Nutanix reported loss of 16 cents in the first-quarter fiscal 2018, it was narrower than the Zacks Consensus Estimate of a loss of 26 cents and year-ago quarter’s loss of 20 cents.

Revenues surged 46.1% from the year-ago quarter to $188.6 million. Product revenues soared 42.7% year over year to $153.5 million, while support & other services revenues jumped 61.3% to $35 million.

Customer Base Expansion Continues

Nutanix added 760 customers taking the total end-customer count to 7,813 at the end of the reported quarter. Number of deals, worth more than $1 million, jumped 36% year over year to 49.Top three deals were all in the federal vertical and accounted for more than $15 million in billings. Among these three deals, two customers selected the company’s AHV hypervisor.

Healthcare vertical performed favourably in the quarter, as the company reported seven deals greater than $1 million. Notable customers were Baylor Scott & White Health and an S&P 500 company that operates one of the largest clinical laboratory networks in the world.

Nutanix booked 15 deals worth more than $2 million.

Prism Pro adoption increased 40% sequentially. The company had 16 Prism Pro deals in excess of $100,000 in the quarter.

Positive Earnings Surprise History

Nutanix has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 18.5%.

Further, it has a long-term expected EPS growth rate of 20%.

Other Growth Drivers

The company launched Xi Cloud Services in strategic partnership with Alphabet GOOGL division, Google.

We believe that Nutanix’s robust product portfolio aided by the launch of Nutanix Cloud and Xi cloud services will continue to boost clientele. Networking and security will further aid customer addition.

Moreover, collaboration with the likes of International Business Machines Corporation IBM is a positive.

Currently, Nutanix carries a Zacks Rank #2 (Buy).

Another top-ranked stock in the broader technology sector is NVIDIA Corporation NVDA, sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA has a long-term expected growth rate of 11.2%.

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