Insights

Why the NEXTDC (ASX:NXT) share price is falling on Friday

This tech share is in the red on Friday….
The post Why the NEXTDC (ASX:NXT) share price is falling on Friday appeared first on The Motley Fool Australia. –

The NEXTDC Ltd (ASX: NXT) share price is under pressure on Friday morning. At the time of writing, the data centre operator’s shares are down 2.5% to $12.10.

This decline means the NEXTDC share price is now in negative territory for the year.

Why is the NEXTDC share price trading lower?

Today’s pullback in the NEXTDC share price appears to have been driven by broad weakness in the tech sector on Friday.

It isn’t just NEXTDC that is under pressure. The likes of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are also recording notable declines this morning. This has led to the S&P/ASX All Technology Index (ASX: XTX) falling a disappointing 2.1% in early trade.

Today’s weakness seems to be in response to a poor night of trade on the tech-heavy Nasdaq index on Thursday. The famous index tumbled 0.7% overnight amid concerns over the global economic recovery.

Is this a buying opportunity?

Analysts at Goldman Sachs are likely to believe the weakness in the NEXTDC share price is a buying opportunity.

Late last month the broker put a conviction buy rating and $14.80 price target on the company’s shares. Based on the latest NEXTDC share price, this implies potential upside of 22% over the next 12 months.

Goldman believes NEXTDC is the most compelling growth story it has under coverage on the ASX.

Its analysts commented: “We remain high-conviction on the growth profile ahead, forecasting +37MW contract wins across FY22-23E (=65% conversion of options). Combined with recent share price underperformance, this gives an attractive growth adjusted valuation. We reiterate our Buy (on CL) on NXT, the most compelling growth story in our coverage. Catalysts: (1) FY21 results, incl. FY22 guidance (GS +2% vs. consensus EBITDA); (2) Any JV or M&A announcements in 1H22; and (3) Further contract wins.”

The post Why the NEXTDC (ASX:NXT) share price is falling on Friday appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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