Why Nutanix Stock Gained 27.3% in October

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What happened

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Shares of Nutanix (NASDAQ: NTNX) gained 27.3% last month, according to data provided by S&P Global Market Intelligence, as two analysts weighed in with favorable coverage of the enterprise software company.

So what

Nutanix stock benefited from favorable analyst coverage in October. Shares climbed roughly 10% on October 10 following the release of bullish notes from analysts from William Blair and Jefferies. These reports highlighted customer satisfaction and a move to a software-only business model as positive catalysts, and came on the heels of a strong earnings report in August that saw fourth-quarter sales increase 62% year over year and full-year sales increase 75% year over year.

The shift away from hardware-based storage to a cloud-only business is expected to help Nutanix improve margins, and the company has been posting strong client growth: Its customer count at the end of its fiscal year ending in July was up 87% over the prior-year period. An increase in large-size deals also points to customer satisfaction and progress in moving upmarket. 

Now what

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The company is posting impressive sales growth and, if its specialized enterprise software continues to offer customers an edge over products from larger, more-resource-rich competitors, the stock could have plenty of room to run. Even after rallying roughly 75% over the last six months, the stock still trades down 25% over the last three years, and its forward-price-to-sales ratio of 3.6 looks appealing in light of the business' rapid growth. 

Nutanix is expected to report first-quarter earnings in late November or early December.

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