Shares of Nutanix Inc. NTNX, -7.45% dropped 5% in premarket trading Thursday after analysts at J.P. Morgan downgraded the stock to underweight on concerns that shares could lag those of peers in the near future following a recent rally. Shares of BlackLine Inc. BL, -3.24% fell 2% and shares of Talend S.A. TLND, -4.51% slipped 1.9%, also on downgrades to underweight. The analysts, led by Mark Murphy, think that Nutanix’s transition to a more software-oriented model could “create near-term business disruption” given that it will require operational adjustments. A change to the company’s sales leadership team might also be disruptive, he argued.
Not sure I follow this line of argument, it is Nutanix’s software strategy that is central to their strategy
NTNX just issued a big capital raise via debt. Made me nervous, plus I didn’t see that much of a moat. Sold my position last week (lucky I guess). Pu the money into NVDA and NKTR.
The analysts, led by Mark Murphy, think that Nutanix’s transition to a more software-oriented model could “create near-term business disruption” given that it will require operational adjustments. A change to the company’s sales leadership team might also be disruptive, he argued
Thanks Fireblade:
Analysts can be very conflicted…before…we heard that they didn’t like the NTNX model of hardware passthrough because it lowered margins…now they don’t like the software model because it is a change from what they didn’t like.
Here is Mark Murphy’s recent calls, some which are also discussed here:
I would also be curious why the debt issue is seen as a negative.
From what I understand they will borrow $500 million for zero interest for 5 years and the conversion will only be delutive above 73.46 a share. Seems favorable to me.
The duopoly argument has been suggested by NTNX along with VMware…even if that occurred…this is a very large TAM and that is certainly supported by this announcement by DELL.