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Why Nutanix Stock Plunged Today

By Steve Symington - Updated May 28, 2019 at 4:41PM

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An analyst downgrade left the cloud-computing software leader falling hard.

What happened

Shares of Nutanix (NTNX -2.49%) fell 10.6% today after Morgan Stanley analyst Katy Huberty downgraded the cloud-computing software specialist from overweight to equal weight. Huberty also reduced her firm's per-share price target on Nutanix stock from $53 to $37 -- which, to be fair, still represented a roughly 5% premium from last Friday's close.

Data center mainframe with blue lighting.

Image source: Getty Images.

So what

To justify her relative bearishness, Huberty said she is worried that disappointing results from Nutanix's storage peers so far this earnings season may be indicative of a broader market slowdown. She also noted the company is facing increasing competition from companies like Dell Technologies

"We remain positive on Nutanix's technology portfolio, but now think a turnaround will take longer than the two to three quarters assumed by investors," Huberty added.

Now what

We should receive more color to that end when Nutanix releases fiscal third-quarter 2019 results this Thursday, May 30, after the market close. But given this note of caution, and with shares still reeling from a massive post-earnings drop in March after Nutanix's sales guidance for the quarter fell far short of investors' expectations, it's no surprise to see the stock falling in response today.

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