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Nutanix Shares Up 26% YTD: How Should Investors Play the Stock?

Nutanix (NASDAQ: NTNX) shares have returned 26.2% year to date, outperforming the broader Zacks Computer and Technology sector's appreciation of 23.4%.

NTNX shares have also outperformed the Zacks Computer – IT Services industry and its peers like Unisys (NYSE: UIS), Evolv Technologies (NASDAQ: EVLV) and Cerence (NASDAQ: CRNC).

Over the same time frame, Unisys has appreciated 0.2%, while Evolv Technologies and Cerence have declined 19.7% and 86.3%, respectively. The industry has appreciated 9.2% YTD.

NTNX's outperformance can be attributed to the steady adoption of hybrid cloud solutions, an increase in renewal and subscription business, and an expanding clientele. 

Nutanix Price and Consensus

Nutanix price-consensus-chart | Nutanix Quote

Does Strong Clientele Justify NTNX's Premium Valuation?

In fiscal 2024, approximately 76% of NTNX's end customers who have been its clients for 18 months or longer made a repeat purchase, reflecting a loyal customer base. Nutanix's total revenues for fiscal 2024 were $2.14 billion, of which 93.8% was from subscriptions.

NTNX stacks are usable with a vast library of operating systems like Microsoft and SAP, and existing customers have benefited from the hyper-converged infrastructure market.

However, NTNX shares are overvalued, as suggested by a Value Score of F.

In terms of the forward 12-month Price/Earnings ratio, NTNX ...