AU$17.37 - That's What Analysts Think NEXTDC Limited (ASX:NXT) Is Worth After These Results

Shareholders of NEXTDC Limited (ASX:NXT) will be pleased this week, given that the stock price is up 16% to AU$17.15 following its latest half-year results. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 2.1%to hit AU$209m. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for NEXTDC

Following the recent earnings report, the consensus from 15 analysts covering NEXTDC is for revenues of AU$409.4m in 2024. This implies a small 3.5% decline in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching AU$0.11 per share. Before this earnings announcement, the analysts had been modelling revenues of AU$409.6m and losses of AU$0.10 per share in 2024. So it's pretty clear the analysts have mixed opinions on NEXTDC even after this update; although they reconfirmed their revenue numbers, it came at the cost of a noticeable increase in per-share losses.

Although the analysts are now forecasting higher losses, the average price target rose 11% to 15.64365, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values NEXTDC at AU$22.01 per share, while the most bearish prices it at AU$12.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await NEXTDC shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 6.8% by the end of 2024. This indicates a significant reduction from annual growth of 19% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 14% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - NEXTDC is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at NEXTDC. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that NEXTDC's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on NEXTDC. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for NEXTDC going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with NEXTDC (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.