What happened

Shares of Nutanix (NASDAQ:NTNX) slumped on Monday after the enterprise software company received an analyst downgrade. The stock was down about 9.2% at 3:40 p.m. EDT.

So what

Analysts at Susquehanna downgraded shares of Nutanix on Monday and slashed their price target on the stock. Nutanix is now rated "negative," down from a previous "neutral" rating. A new price target of $33 is well below the previous $55 price target.

A digital representation of a cloud.

Image source: Getty Images.

Susquehanna is worried about competition from VMware and NetApp, as well as from cloud infrastructure companies like Microsoft. Nutanix sells software that enables multi-cloud architectures using hyperconverged infrastructure technology. While much of the attention is paid to public cloud providers, Gartner predicted last year that 90% of organizations will adopt hybrid infrastructure management by 2020.

Susquehanna also sees a tough road to profitability, predicting that the company will have a hard time reaching break-even before 2022. Nutanix posted a net loss of $297.2 million on $1.16 billion of revenue in 2018.

Now what

Shares of Nutanix have surged this year, but those gains have started to come undone in the past month. The stock now sits roughly 35% below its 52-week high after Monday's slump.

Nutanix stock is not particularly cheap, trading for more than six times annual revenue. Sales are growing quickly, but it may take years before the bottom line turns positive.