Please ensure Javascript is enabled for purposes of website accessibility

Why Nutanix Stock Jumped Today

By Evan Niu, CFA – May 2, 2017 at 4:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A tale of two Wall Street research notes.

What happened

Shares of hyperconverged infrastructure (HCI) company Nutanix (NTNX -1.26%) jumped today, closing up 9% after a Wall Street analyst issued a bullish research note.

So what

William Blair analyst Jason Ader is reiterating his outperform rating on Nutanix, believing that current prices potentially represent meaningful upside with little downside risk, which the analyst considers a favorable risk/reward profile.

A data center

Image source: Getty Images.

Ader notes that channel partners are seeing increased categorial interest for HCI offerings, and Nutanix is still considered the category leader. There has been concern surrounding Dell, which is one of Nutanix's largest distributors, and Dell's expanding HCI presence due to its acquisition of EMC that closed late last year. The analyst believes that the partnership is stable.

Now what

Interestingly, there was also a bearish research note from Summit Redstone analyst Srini Nandury today, reiterating a sell rating and $14 price target. Nandury does not believe that Nutanix can sustain ongoing product investments to remain competitive with larger players. At the same time, those larger companies are the most logical potential suitors that could conceivably be interested in buying Nutanix to accelerate their own road maps. With larger rivals expanding into Nutanix's turf, the analyst does not believe there is a "natural buyer."

It seems that investors are paying more attention to the bullish note today.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.