The NEXTDC Ltd (ASX:NXT) share price just hit a new record high. Can the data centre operator’s shares go even higher from here?
The post The NEXTDC (ASX:NXT) share price just hit a record high: Can it go higher? appeared first on Motley Fool Australia. –
The market may have sunk lower on Thursday, but that didn’t stop the NEXTDC Ltd (ASX: NXT) share price from continuing its charge.
At one stage the data centre operator’s shares hit a new record high of $12.62.
When the NEXTDC share price hit that level, it meant it was up an impressive 93% since the start of the year.
Why is the NEXTDC share price at a record high?
Investors have been buying NEXTDC’s shares this year after increasing demand for capacity in its data centres led to it reporting a strong full year result in FY 2020.
For the 12 months ended 30 June 2020, NEXTDC delivered a 14% increase in revenue to $205.2 million. This was at the top end of its guidance range of $200 million to $206 million.
The catalysts for this were a 15% rise in customers to 1,364, a 33% increase in contracted utilisation to 70MW, and a 19% lift in interconnections to 2,079.
Pleasingly, NEXTDC is continuing to demonstrate operating leverage. It reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $104.6 million. This was an increase of 23% year on year and at the top end of its guidance range.
What else is driving the NEXTDC share price higher?
Also supporting the NEXTDC share price has been a number of positive broker notes.
One broker that is particularly bullish is Goldman Sachs. It recently reiterated its buy rating and $13.20 price target on the company’s shares.
But it may not even stop there, with the broker suggesting NEXTDC’s shares could be worth upwards of $20.00.
Goldman commented: “Our scenario analysis suggests that a value of $20 per share is possible for NextDC, based on assumptions that are high, but in our view not unrealistic considering the current acceleration in demand that is evident across the business.”
Should you invest?
I’m a huge fan of NEXTDC and continue to believe that it would be a fantastic buy and hold option for investors. This is thanks to its strong market position and exposure to the seismic shift to the cloud.
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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.