Nuix (ASX:NXL) share price hits all-time low: Time to buy?

Analytics software maker’s stock price has almost halved in just a few days. Is it time to grab or has the company fundamentally changed?

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Nuix Ltd (ASX: NXL) shares sank to an all-time low of $5.70 during intraday trade on Wednesday.

The Nuix share price actually fell off a cliff back on Friday when the analytics software provider announced its financial results before the ASX opened for trade.

The 4% decline in revenue and statutory net loss of $16.6 million didn’t impress the market, which felt the company was falling behind its own prospectus projections.

After trading at as high as $11.86 in January, Nuix shares fell an ugly 31% that day to go from $8.98 to $6.20.

And the Nuix share price has descended even further this week to trade in the $5s by Wednesday lunchtime.

So what happened to the market darling that listed on the ASX with much fanfare in early December?

Two experts back then picked Nuix as the best initial public offering (IPO) of 2020.

Now The Motley Fool has gone back to the same fund managers to see if their opinion has changed:

Nuix is a cheap technology share

Tribeca Investment Partners’ Alpha Plus portfolio manager Jun Bei Liu still has faith in Nuix.

“Our view of the stock remains positive. We believe the share price has been severely punished on small changes in revenue composition.”

She told The Motley Fool the Nuix share price is expected to head back up as the full-year results are delivered in August.

“This business is one of the cheapest tech businesses listed on the ASX. It’s trading at half of the revenue multiple as many major tech businesses, [but] with higher growth.”

Prime Value portfolio manager Richard Ivers is also still a believer.

“Long term it’s still an attractive business,” he told The Motley Fool.

“We didn’t get a great allocation in the IPO and didn’t chase the stock when it listed. So [we] haven’t owned it the last few months – still watching.”

Reasons for Nuix’s poor half-yearly result

Ivers acknowledged the first-half result was “disappointing”.

“The issue we are working to understand is the earnings profile and therefore the valuation of the business.”

Liu said that two factors had contributed to the half-year results coming in poorer than the prospectus revenue forecast.

“Firstly, the Australian currency has strengthened against the US dollar — and a big part of Nuix’s revenue is in US dollars,” she said.

“Secondly, the US election in November last year has disrupted the timing of contract awards (many of those missed contracts have now been signed in January). If you adjust for these two factors, the revenue was largely in line with forecasts.”

Only a couple of days before the half-yearly results, Morgan Stanley had put an overweight rating and a share price target of $11.00 on Nuix shares.

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Returns as of 15th February 2021

Tony Yoo owns shares of Nuix Pty Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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