NTNX: Future VMware Displacements Will Drive Long-Term Outperformance Despite Near-Term Guidance Reset

Nutanix's consensus analyst price target has been revised lower by roughly $10 to $15 per share, as analysts reduce valuation multiples and near term growth expectations following an in line quarter with softer guidance and the company's first miss in over five years.

Analyst Commentary

Street research following the quarter reflects a more cautious stance on Nutanix's near term execution, even as many on the sell side remain constructive on the long term growth and market share opportunity.

Bullish Takeaways

• Bullish analysts continue to see Nutanix as a key beneficiary of the shift toward HyperConverged Infrastructure, which they believe can sustain double digit growth over time and support premium valuation multiples versus traditional hardware peers.
• The opportunity to displace VMware at renewal cycles, amid customer pushback on price increases, is viewed as a multi year share gain driver that could offset cyclical softness in U.S. Federal or other slower segments.
• Some research highlights Nutanix's positioning around unstructured data and AI workloads, arguing that AI inferencing use cases and broader data modernization efforts can provide incremental demand catalysts beyond the current guide.
• Despite the recent guide reduction, certain firms point to solid free cash flow dynamics and the impact of future dated deals, suggesting that underlying demand trends may be healthier than headline revenue figures imply.

Bearish Takeaways

• Bearish analysts emphasize that the first revenue miss in more than five years raises questions about forecasting precision and execution, leading to lower valuation multiples and reduced confidence in out year growth targets.
• The increased mix of contracts with future start dates, while supportive of cash generation, is seen as complicating revenue visibility and adding volatility to quarterly results, which can weigh on near term sentiment and share performance.
• Multiple firms have cut price targets by roughly $10 to $20 per share and trimmed longer term revenue estimates, reflecting caution around the sustainability of recent growth and the impact of macro and deal timing headwinds.
• Some channel checks have driven rating downgrades to more neutral stances, with concerns that slowing U.S. Federal demand, elongated sales cycles and competition could limit upside to current guidance and constrain multiple expansion.

What's in the News

• Nutanix updated its fiscal 2026 outlook, guiding second quarter revenue to $705 million to $715 million and full year revenue to $2.82 billion to $2.86 billion (corporate guidance).
• The company reported progress on its share repurchase program, buying back 704,000 shares for $50.03 million between August 1 and October 31, 2025, and completing 4,861,000 shares repurchased for $288.6 million under its August 31, 2023 authorization (buyback tranche update).
• At Microsoft Ignite 2025, Nutanix announced that Nutanix Cloud Platform will support Microsoft Azure Virtual Desktop for hybrid environments. This will enable customers to run Azure Virtual Desktop on premises on Nutanix AHV while using Azure management and brokering (client announcement).
• DartPoints joined the Nutanix Elevate Service Provider Program to deliver fully managed, single tenant private cloud solutions on Nutanix HCI. The offering targets highly regulated industries and potential future expansion into GenAI focused infrastructure services (client announcement).
• Nutanix was added to the S&P 1000 index, increasing its visibility and potential ownership among index tracking and benchmark aware investors (index constituent add).

Valuation Changes

• Fair Value Estimate remains unchanged at approximately $70.70 per share, indicating no revision to the long term intrinsic value assessment.
• The discount rate edged down slightly from about 8.79 percent to 8.74 percent, reflecting a modest reduction in the assumed risk profile or cost of capital.
• Revenue growth is effectively unchanged, holding near 13.00 percent annualized in the long term model.
• Net profit margin is stable at roughly 15.84 percent, signaling no material change to long term profitability assumptions.
• The future P/E has risen slightly from around 41.8x to 42.7x, implying a modestly higher valuation multiple on forward earnings expectations.