The data centre operator is only second to Sandfire (SFR) as the strongest position in the portfolio this calendar year, up over 22%, currently sitting at a 6-month high. The rally largely follows a better-than-expected result at their half-year earnings, while bond yields topping out have also been supportive given the long-duration exposure (read expected future earnings). The market had been concerned a number of major customers would be looking to pull back on future capacity requirements which would weigh on NEXTDC’s ability to grow into its valuation, particularly after a soft 2H last year, however, revenue has proven sticky and incremental growth continues to come through. In saying that, it is on the more expensive side and NXT will be punished if the market moves back to an “earnings now” bias later in the year.
MM is bullish NXT targeting $12
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