Shares of Nutanix (NTNX - Free Report) declined as much as 11.6% to close at $46.43 on Sep 17, following the news of expansion of Alphabet’s (GOOGL - Free Report) Google Cloud Platform into the fast-growing hyperconverged market.
Google is reportedly working on a custom-designed computer in order to fortify its foothold in the private data center market. The Information reported that the new computer will combine server, storage and networking functions for “a handful of large customers to run in private data centers.”
The new product will also help Google take on other existing players in the field such as Hewlett Packard Enterprise (HPE - Free Report) and VMware (VMW - Free Report) . Shares of Hewlett Packard Enterprise and VMware fell 1.8% to $16.28 and 3.5% to $157.01, respectively, following the news on Sep 17.
However, on a year-to-date basis, we note that shares of Nutanix recorded the highest return of 31.6%, while VMware, Hewlett Packard Enterprise and Alphabet grew 25.3%, 13.4% and 10.1%, respectively.
Year-to-Date Price Performance
Nutanix — A Leader
Nutanix is considered a pioneer of hyperconverged infrastructure (HCI) market, which is projected to grow rapidly in the long term. Market research firm, Gartner, has placed Nutanix as a leader in its “Magic Quadrant for Hyperconverged Infrastructure” for 2018.
Nutanix’s software-defined HCI solutions support multi-hypervisor and multi-cloud with unified management. Nutanix’s solutions are primarily deployed in large and centralized datacenters.
The company’s built-in hypervisor has been gaining significant traction as customers continue to select it as a low-cost alternative to other vendor offerings. Nutanix’s cloud-based deployment strategy is a differentiator.
Most importantly, Nutanix added 1,000 customers, taking total end-customer count to 10,610 at the end of the last reported quarter.
Nitanix added 46 deals worth more than $1 million in the last reported quarter, out of which nine were worth more than $3 million and two were worth more than $5 million. The company also made the largest deal in its history worth more than $20 million in the quarter.
Strong adoption of its products and high customer satisfaction rate are expected to expand its customer base. This along with recurring revenue stream is expected to drive the top line, which showed remarkable growth in the last five years.
However, competition from the well-established companies that enjoy significant pricing power does not bode well for Nutanix.
Nutanix currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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