“Armchair Trader Series” Recommendations
- Week Beginning -
Monday, August 27, 2018

by Ian Harvey

IMPORTANT NOTE: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy


"Trading Capital Management"

Option Trade – Nutanix Inc. (NASDAQ:NTNX) Calls

 Monday, August 27, 2018

** OPTION TRADE: Buy the NTNX OCT 19 2018 60.000 CALL at approximately $3.60. Place a pre-determined sell at $7.20.

Also include a protective stop loss of $1.45.

Enterprise cloud company Nutanix Inc. (NASDAQ:NTNX) will report earnings on Thursday, August 30, after the market closes. Equities research analysts expect Nutanix Inc to post earnings of ($0.21) per share for the current quarter. Nine analysts have made estimates for Nutanix’s earnings, with estimates ranging from ($0.24) to ($0.19). Nutanix reported earnings per share of ($0.33) in the same quarter last year, which would suggest a positive year-over-year growth rate of 36.4%.

The last time we recommended Nutanix was for “Cut-to-the-Chase” members on November 27 last year, producing profits of 150%.

Nutanix is a worldwide pacesetter in the cloud software market. The company also has built a reputation by paving the way for hyper-converged infrastructure solutions. Nutanix cut its teeth providing "invisible infrastructure." The company's technology helps a special subset of clients: those who want to keep their servers off the cloud platforms of giants like Amazon, Alphabet, or Microsoft.

Nutanix has risen 198.80% since August 15, 2017 and is uptrending. It has outperformed the S&P500 by 186.23%.

And, has risen 46.2% in the first six months of 2018! Nutanix shares have benefited from the company's accelerated revenue growth in recent quarters. A positive earnings report released on March 1, covering the company's fiscal second quarter of 2018, was the primary catalyst for its ascent in the first half of the year.

Past Earnings…..

In the second quarter (the three months ended Jan. 31, 2018), revenue surged 44% over the prior-year quarter to $286.7 million, while billings expanded by 55% to $355.9 million. In addition, Nutanix more than doubled the number of $1-million-plus deals won during the period against the prior year, to 104 transactions.

Nutanix followed this performance with an equally strong showing in its fiscal third-quarter report, which was released May 24. During the third quarter, the company's top line gained 41% to $289.4 million, and billings continued to exhibit strength, rising 50%.

Moving Forward…..

Analysts expect that Nutanix will report full year earnings of ($0.73) per share for the current financial year, with EPS estimates ranging from ($0.75) to ($0.70). For the next year, analysts expect that the business will report earnings of ($0.63) per share, with EPS estimates ranging from ($1.12) to ($0.25).

Influencing Factors…..

Nutanix recently inked a colossal $45 million contract with the Air Force through an anonymous channel partner. Under the terms, Nutanix is primed to supply hyperconverged kits to the U.S. Air Forces Central Command. The agreement shines as Nutanix's "largest single deal" on record, praises William Blair analyst Jason Ader.

Ader believes the win "reflects the tremendous momentum that Nutanix is seeing in the federal vertical." While the benefits of the deal's value won't all flow to Nutanix, Ader wagers the tech player stands to gain roughly a $30 million to $35 million slice "split between product revenue and a five-year services agreement."

The analyst determined that Nutanix has racked up nearly 100 new U.S. government customers to its base as of last year. This brings Nutanix's total in the sector up to roughly 320.

Nutanix is reaping the rewards of management's decision to decelerate sales of third-party partners' hardware products, in favor of focusing solely on the company's own cloud-based enterprise networking software. This shift has boosted profitability and operating cash flow.

Three recently launched software offerings that handle database snapshots, cloud spend monitoring, and cloud application-based security, are Era, Beam, and Flow.

Analysts and Hedge Funds Opinions

Royal Bank of Canada upped their price target on shares of Nutanix to $70.00 and gave the company an “outperform” rating in a research report on Wednesday, June 13th.

Several other equities analysts have recently commented on the company…..

  • KeyCorp lifted their price objective on Nutanix from $64.00 to $68.00 and gave the company an “overweight” rating in a report on Friday, June 22nd.
  • Needham & Company LLC lifted their target price on shares of Nutanix to $65.00 and gave the company a “buy” rating in a research note on Tuesday, May 22nd. They noted that the move was a valuation call.
  • Wells Fargo & Co lifted their target price on shares of Nutanix from $60.00 to $65.00 and gave the company a “positive” rating in a research note on Thursday, May 10th.
  • Finally, Oppenheimer lifted their target price on shares of Nutanix from $65.00 to $70.00 and gave the company an “outperform” rating in a research note on Tuesday, May 15th.

Shares of Nutanix have received an average rating of “Buy” from the twenty-three research firms that are presently covering the firm. Three investment analysts have rated the stock with a sell rating, three have given a hold rating and seventeen have given a buy rating to the company. The average target price is $62.51.


Looking forward to the final quarter of the fiscal year, there is plenty of anticipation for continued double-digit gains in revenue and billings.

Nutanix has a twelve month low of $20.02 and a twelve month high of $64.87. The company has a debt-to-equity ratio of 1.19, a current ratio of 3.05 and a quick ratio of 3.05.