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Nutanix Inc., a darling Wall Street company, is expected to lose nearly a third of its value on Friday after the cloud computing company released extremely disappointing forecasts.
Nutanix
NTNX, -31.72%
Stocks fell by 31% in the morning session and were on the verge of their worst one-day slide on history, with the company's latest outlook prompting several analysts to head for the hills. If losses continue, the fall could wipe $ 2.9 billion off the market value of Nutanix, based on the number of shares in the company's last deposit.
"In the end, we think that Nutanix has tried too much (massive expansion of the portfolio, cloud deployment, M & A, etc.) with too little (investment in sales / marketing) too long (recent year), who caught up, "wrote Ittai Kidron, of Oppenheimer, who reduced his score on Friday to perform.
The weak forecast of the company is a reflection of a "voided pipeline" and an insufficient number of additions in the commercial team, by Kidron. Although the company seems "properly focused" on talent recruitment in the areas of sales and engineering, he believes that investments should "increase significantly" over the next year.
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Stifel's Brad Reback also discussed the company's sales performance issues while downgrading the shares to be retained.
"With an installed base accounting for approximately 70% to 75% of new bookings in the past two years, it appears that the core penetration rates of society [hyperconverged-infrastructure] The proposed solution may be more expensive than expected and new solutions have not yet reached the scale needed to generate an overall revenue growth rate, "he wrote.
Reback, which lowered its target price from $ 39 to $ 39, warned that Nutanix would face difficult billing comparisons in the coming quarters.
According to FactSet, at least 13 analysts lowered their price targets on Nutanix shares after the release of the report. Of the 22 analysts surveyed by FactSet who follow the stock, 15 have buy ratings, six hold grades, and one has a sales rating. The average price target is $ 51.63, or nearly 50% above current levels.
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Mehdi Hosseini, of Susquehanna, said the company's comment confirmed its downside decision on equities.
"Flexible billing forecasts and increased operating expenses reinforce our negative view, as sales productivity must accelerate (not decrease) for the company to reach its $ 3 billion target for 2021, which, in our opinion, is becoming increasingly difficult, particularly because of the intensification of competition. with a deceleration of demand growth in the final market, "wrote Hosseini, which aims for a goal of $ 33.
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Jason Ader, of William Blair, keeps the faith, and writes that he remains a faithful supporter of the long-term story and thinks that the problems related to the company's performance are adjustable, including understood through a recently completed sales direction change, although the process takes a few quarters.
"In our opinion, Nutanix has reached a pretty big slower, but can recover as it did in early 2017," wrote Ader, who estimates that the stock is outperforming. "In addition, it seems that management has pressed hard on the reset button instead of running the risk of new short-term forecasts."
The stock has lost 24% in the last three months because the S & P 500
SPX, + 0.19%
increased by 1.6%.
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