Shares of Nutanix (NTNX) are moving heavily today. Nutanix stock is one that has struggled since its IPO, but has recently begun to gain momentum once again. Why the rally?

Well there seems to be real excitement over Nutanix’s software shift from the Street. This newfound belief from the Street has driven the stock into a big rally the last few months from $15 with shares nearly at $40. Folks, Nutanix stock has not hit these levels since just after its IPO a year ago.

You see, since the name began trading Nutanix stock was assigned lower multiples of revenue due to its concentration in hardware. But it is the software side of things that have the Street really pumped up.

Moving to software billings, Nutanix stock will get a jump because earnings will improve. In fact, gross margins should widen heavily. In addition, the company can scale up. There is a growth path here, and Nutanix stock will enjoy wider prices and and expanding multiple if it can achieve its move to software and away from hardware.

Nutanix posted record-setting revenues of $275.6 million this year, up 46% from last year and surpassed analyst estimates by $8.7 million.

Earnings were 10 cents above analyst consensus of -$0.26, mostly because sales were higher and margins were better than expected. What we found incredible is that spending only rose 12%, but revenues spiked 46%. That is really something and as Nutanix becomes more mainstream, the growth path is laid out. Cash remains strong as it also generated $10.2 million of operating cash flow in the quarter more than doubling last year.

Keep a close eye on Nutanix stock. It could be moving much higher in the coming weeks.

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