NEXTDC Limited (ASX:NXT) Just Released Its Interim Earnings: Here's What Analysts Think

NEXTDC Limited (ASX:NXT) shareholders are probably feeling a little disappointed, since its shares fell 4.6% to AU$11.20 in the week after its latest interim results. The results don't look great, especially considering that statutory losses grew 381% toAU$0.038 per share. Revenues of AU$124m did beat expectations by 5.1%, but it looks like a bit of a cold comfort. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for NEXTDC

Taking into account the latest results, the current consensus from NEXTDC's twelve analysts is for revenues of AU$250.5m in 2021, which would reflect a meaningful 10% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 60% to AU$0.056. Yet prior to the latest earnings, the analysts had been forecasting revenues of AU$248.7m and losses of AU$0.0075 per share in 2021. While this year's revenue estimates held steady, there was also a considerable increase to loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target held steady at AU$14.04, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values NEXTDC at AU$16.42 per share, while the most bearish prices it at AU$10.85. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that NEXTDC's revenue growth will slow down substantially, with revenues next year expected to grow 10%, compared to a historical growth rate of 19% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 25% next year. Factoring in the forecast slowdown in growth, it seems obvious that NEXTDC is also expected to grow slower than other industry participants.

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 sales are tracking in line with expectations - although our data does suggest that NEXTDC's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for NEXTDC going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for NEXTDC that we have uncovered.

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