Why the Nuix (ASX:NXL) share price is racing 7% higher today

A leading broker believes the Nuix share price is a bargain…
The post Why the Nuix (ASX:NXL) share price is racing 7% higher today appeared first on The Motley Fool Australia. –

The Nuix Ltd (ASX: NXL) share price has been a strong performer on Thursday.

In afternoon trade, the investigative analytics and intelligence software provider’s shares are up 7% to $2.80.

Despite this strong gain, the Nuix share price is still down a disappointing 67% since the start of the year.

Why is the Nuix share price charging higher today?

Investors have been buying the company’s shares after a leading broker responded positively to news that its Chief Executive Officer (CEO) and Chief Financial Officer (CFO) are leaving.

On Tuesday Nuix advised that CEO Rod Vawdrey intends to retire but will remain in the role while an international search is conducted for a replacement to lead the company on the next phase of its journey. It also advised that the company’s CFO, Stephen Doyle, has had his employment terminated by mutual agreement with effect from 30 June.

This follows a series of guidance downgrades by Nuix since its IPO late last year, which has led to its shares crashing notably lower than their listing price.

What did the broker say?

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $6.40 price target on the company’s shares.

Based on the latest Nuix share price, this price target implies potential upside of almost 130% over the next 12 months.

While Morgan Stanley acknowledges that such an overhaul in the C-suite is unusual so soon after an IPO and carries risks, it believes it is a necessary and constructive step towards rebuilding investor confidence in the company.

Outside this, the broker is fan of Nuix due to its long term growth potential. It believes that the global forensic and investigative software market is a structural growth story and Nuix has a strong position within it.

The post Why the Nuix (ASX:NXL) share price is racing 7% higher today appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended 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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