Nutanix stock price target lowered to $93 by BofA on higher expenses

Nutanix (NTNX) reported strong Q4 FY25 results, surpassing revenue and EPS expectations with product revenue growing 28% year-over-year and operating margins exceeding guidance at 18.3%. BofA Securities maintained its Buy rating, albeit with a slight price target reduction to $93, citing the company's historical outperformance of conservative guidance and continued market share opportunities against VMware. Nutanix also provided robust FY26 revenue guidance of $2.90-2.94 billion and projected improved operating margins of 21-22%, signaling ongoing growth, though InvestingPro notes the stock is currently trading above its fair value after a 33.1% return over the past year.

Analysis

Nutanix (NTNX) delivered a strong fourth-quarter performance for fiscal 2025, exceeding analyst expectations with revenue of $653 million and an EPS of $0.37. The quarter was characterized by robust fundamental growth, including a 28% year-over-year increase in product revenues and the acquisition of 800 new logos. Profitability also surpassed forecasts, with the operating margin reaching 18.3%, which is 230 basis points above the high end of the company's guidance, while the gross profit margin remains exceptional at 86.37%. Looking ahead to fiscal 2026, management has guided for revenue between $2.90-2.94 billion, implying 15% YoY growth, and an improved operating margin of 21-22%, despite planned increases in operating expenses. While BofA Securities slightly lowered its price target to $93 from $95, it maintained a Buy rating, highlighting management's historical tendency to issue conservative guidance that it subsequently exceeds. This perspective is balanced by InvestingPro data indicating the stock, after a 33.1% one-year return, is currently trading above its fair value, despite its 'GOOD' overall financial health score.

Key Decisions for Investors

• Investors may view the strong earnings beat and management's history of outperforming conservative guidance as a bullish signal, justifying holding or adding to positions on the basis of continued operational momentum and market share gains against VMware.
• Given the stock's 33.1% appreciation over the past year and indications that it is trading above its fair value, it would be prudent for investors to assess their position size and consider the elevated valuation risk before initiating new long positions at current levels.
• Monitor the execution of partnerships with Dell and Cisco for tangible evidence of market share capture, as this is a key component of the growth thesis, and closely track operating margin performance against the new FY26 guidance to validate the potential for further upside.