Here’s why this ASX 200 tech share is smashing the market today

The NextDC Ltd (ASX: NXT) share price is ending the week on a positive note.

In afternoon trade, the data centre operator’s shares are up 3% to $9.59.

This compares favourably to the ASX 200 index, which is up 0.25% in late trade.

Why is the NextDC share price pushing higher?

Investors have been bidding the NextDC share price higher today after the company reiterated its guidance at its annual general meeting.

According to the release, FY 2023 has started positively and management continues to expect data centre services revenue of $340 million to $355 million. This will be a 17% to 22% increase year over year.

Management notes that its revenue growth has been assisted by current economic factors, with price escalation as well as power cost protection built into contracts and the majority of power costs being passed through.

In respect to earnings, the company has reiterated its guidance for underlying EBITDA of $190 million to $198 million. This will be a 12% to 17% increase from FY 2022.

Broker reaction

Goldman Sachs has responded well to the update and highlights that management spoke positively about its sales outlook. It commented:

NXT provided a tangible comment on the sales pipeline, noting that it is of a record size, and is expected to convert into material new contractual commitments into the next 6-12 months. We see this as clear positive statement, noting it is the first time NXT has been specific on the timing of material new contracts.

And while Goldman was confident that NextDC would achieve its guidance this year, it was pleased given recent commentary from other providers. It said:

NXT noted continued strong growth in enterprise, network and partner pipelines driving healthy margin, with revenue growth assisted through price escalation & power pass-through. Although we had seen limited risk to NXT guidance in FY23, we still view this as a positive, particularly given Infratil recently reduced CDC forward guidance on delayed customer ramp.

Goldman Sachs currently has a conviction buy rating and $14.30 price target on its shares.

The post Here’s why this ASX 200 tech share is smashing the market today appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
• 5 things to watch on the ASX 200 on Friday
• Analysts say these quality ASX growth shares can rise ~40%
• 2 big name ASX companies ready for a ‘share price recovery’: experts
• ‘Close to bottom’: Expert names 3 bargain ASX shares to buy right now

Motley Fool contributor James Mickleboro has positions in NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/EYC0yAS