Nutanix (NASDAQ:NTNX) appears to be more receptive to a takeover approach and the company may see $27-$30/share in a deal after a WSJ report on Friday that the company is considering a sale after interest, according to Piper Sandler. Nutanix shares popped 24% on the news.
IBM-Red Hat (IBM), Cisco (CSCO), HP Enterprise (HPE) or private equity are the most likely buyers for Nutanix (NTNX), Piper Sandler analyst James Fish wrote in a note on Friday. The $27-$30/share price equals a multiple of 4-4.5x CY2023 recurring revenue. A $30 deal for NTNX would represent a 15% premium to its current price and a 42% premium to its share price on Thursday, prior to the WSJ report.
"We see this takeout discussion as helping to create a floor on the stock & would continue to buy here," Fish, who has an overweight rating and $29 price target on Nutanix wrote.
The WSJ news comes after some corporate governance changes announced late last month spurred some renewed takeover speculation. One of the biggest announcements was the declassification of the company's board structure and the elimination of the super majority vote requirement.
Some private equity deals in the cloud space have averaged around a ~5x premium, which would imply a price of $34/share for Nutanix (NTNX), though Nutanix is in storage and has lower profitability than most other of those companies that were acquired, according to Piper's Fish.
Needham analyst Michael Cikos earlier this month wrote that possible strategic buyers for Nutanix (NTNX) include Cisco (CSCO), HP Enterprise (HPE) and cloud players such as Amazon's (AMZN) AWS and Google (GOOGL) Cloud. The analyst highlighted that Nutanix former CEO reportedly turned down bids from Cisco and HPE in 2016 before Nutanix (NTNX) had its IPO.