Cloud Stocks CRM and NTNX Shine After Earnings

A number of analysts cut their outlooks on NTNX, though

Nov 28, 2018 at 9:08 AM
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Salesforce.com, Inc. (NYSE:CRM) shares are set to rise after earnings, trading up 8.5% in pre-market action. The enterprise software specialist reported third-quarter earnings that were well above estimates, driven by better-than-expected revenue for the period. Salesforce also raised its full-year outlook.

The robust report sparked a handful of bull notes from analysts, with the highest price target coming from RBC at $182, representing all-time-high territory for CRM stock. Most brokerage firms are already all in on the equity, considering there are 26 "strong buy" recommendations, versus just two "hold" ratings.

Options traders were taking a more cautious stance ahead of earnings, based on the Schaeffer's put/call open interest ratio (SOIR) of 1.16. This put-heavy reading ranks in the 93rd annual percentile, showing it's rare for put open interest to outweigh call open interest by such levels among contracts expiring within three months.

Much like the broader tech space, the security had been struggling in recent months, falling from its record peak near $160 back in early October to yesterday's closing price of $127.54. Still, CRM had a year-to-date lead of nearly 25% coming into today.

As for fellow cloud specialist Nutanix Inc (NASDAQ:NTNX), the shares are trading 7.5% higher before the open. The company's fiscal first-quarter per-share loss of 13 cents was less than expected thanks mostly to strong growth in subscription revenue.

Despite this, the resulting analyst attention has been downbeat, with at least four brokerage firms cutting their price targets on NTNX shares. Among the bear notes was Jefferies' price-target reduction to $48 from $60. More broadly speaking, 10 of 15 analysts recommend buying the security.

There has actually been a steady increase in short interest on Nutanix in recent months, including a 4.3% increase in the last two reporting periods. As it stands now, over 6% of the float is held by these bears.

NTNX has also been sliding on the charts, settling at $40.97 yesterday. The 50-day moving average has acted as notable resistance, though the shares are set to soar past this trendline today.

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