Nutanix Shares Soar As Analyst Calls It 'a Once-in-a-decade' Opportunity

Shares of Nutanix Inc. were soaring 9% Friday afternoon after Goldman Sachs added the stock to their conviction list, saying it has an estimated 53% return potential to their $31 price target. Goldman Sachs calls Nutanix, a hyperconverged infrastructure company, a "once-in-a-decade tech infrastructure story," as they see strong adoption of the technology among chief information officers. According to their June survey, 18% of CIOs expected to move to hyperconverged systems in the next two years, with Nutanix as the leader in the field. Additionally, they see Nutanix on a path for long-term double-digit growth, high gross margins and large operating leverage. In the shorter-term, Nutanix should benefit from changed accounting rules that will move its software revenues, which are currently deferred, to its profit and loss statement. "We estimate that the new accounting methodology could increase FY18/FY19 revenues by 12%/13%,"wrote Simona Jankowski, the lead analyst on the note. There is also the possibility of Nutanix as an acquisition target, given its unique position in the space and its 17% year-to-date stock drop. The analysts have a buy rating and $31 price target on the stock. Shares of Nutanix have gained 26% in the past month, compared to the S&P 500's gain of 1%.