Why Nextdc Ltd just printed a 52-week high

Independent data centre operator Nextdc Ltd (ASX: NXT) shares are up 0.7% to $7.72 at the time of writing – a 52-week high for the stock and 79% above its $4.31 share price at this time last year.

UBS yesterday retained its buy rating on the stock, raising its price target from $7.70 to $9.05 on the belief Nextdc will book strong earnings growth over the next decade due to a rising demand for data centres and cloud computing.

Nextdc’s strategy of expansion is backed up by a capital raising by way of underwritten institutional placement of $281 million and an uncapped share purchase plan which will fund the acquisition of three commercial properties to meet the explosive demand for data centres across Australia.

The new developments will be in Sydney, Melbourne and Perth.

The good times come despite news Asia Pacific Data Centre Group (ASX: AJD) has commenced legal proceedings against Nextdc in relation to an access rights debacle in relation to three properties owned by Asia Pacific and leased by Nextdc earlier this year.

Nextdc maintain Asia Pacific was acting outside of its lease agreement terms at the time.

Other notable IT stocks at present include Xero Limited (ASX: XRO) and Bravura Solutions Ltd (ASX: BVS) – both emerging players in the software space receiving plenty of attention for their innovative offerings.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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