Nutanix (NTNX) is predicted to attract customers away from competitor VMware, now owned by Broadcom (AVGO), according to an analyst who upgraded Nutanix on Wednesday. The software maker’s stock rose in anticipation of its fiscal third-quarter earnings report due on May 29. On the stock market today, Nutanix stock rose 2.8% to 67.15 in morning trading.
Nutanix sells cloud-computing network management software and has recently formed a marketing partnership with Cisco Systems (CSCO). According to IBD Stock Checkup, Nutanix’s relative strength line has hit new highs, earning it “blue dot” status and positioning it as a potential takeover target. This comes despite VMware’s potential sales advantages as part of Broadcom, which has been acquiring companies to strengthen its software and services business.
Raymond James analyst Simon Leopold raised his rating on Nutanix stock to outperform from neutral, citing the unexpectedly high price increases resulting from Broadcom’s efforts to enhance growth and performance for VMware. Leopold cautioned that it may take years for some customers to transition from VMware to Nutanix due to complex networking technologies involved. However, he believes that Dell Technologies (DELL) selling VMware to chipmaker Broadcom last year in a $69 billion deal will drive competition in the cloud computing market and benefit companies like Nutanix.
Leopold also noted that while VMware may have some sales advantages as part of Broadcom, companies like Dell Technologies are exploring alternatives like Nutanix due to unexpectedly high price increases resulting from bundling efforts by Broadcom. Despite this challenge, Leopold believes that the competitive landscape will continue to evolve and drive innovation in the cloud computing industry.