NEXTDC share price races higher on coronavirus update

The NEXTDC Ltd (ASX:NXT) share price raced higher on Thursday after providing an update on how the coronavirus is impacting its business…

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The S&P/ASX 200 Index (ASX: XJO) may have tumbled lower on Thursday, but that didn't stop the NEXTDC Ltd (ASX: NXT) share price racing higher.

The data centre operator's shares ended the day with a solid 3.5% gain to $7.29.

Why did the NEXTDC share price race higher?

Investors were buying NEXTDC's shares on Thursday after it provided an update on its COVID-19 impact.

According to the release, there has been no noticeable change to NEXTDC's sales pipeline as a result of the COVID-19 outbreak.

And while increasing travel restrictions will lead to new ways of selling and installing, management advised that underlying demand for NEXTDC's premium data centre services is expected to remain robust.

Furthermore, the company expects to benefit from the inherent tailwinds caused by the increasing use of online digital technologies that support telecommuting to working from home. It also notes the increased use of consumer platforms for online shopping, food delivery, social media, video streaming and gaming.

NEXTDC's CEO, Craig Scroggie, said: "We see the impact of these global health challenges as ushering in a new way of working that will further accelerate the demand for highly resilient online technology services such as those powered by NEXTDC's best in class infrastructure platform."

"The Company expects that these universal changes to the way we live and work will drive further strong tailwinds that will continue to accelerate the demand for our world leading data centre services."

Another positive is that the company has been busy looking into its supply chain to identify potential infrastructure delivery delays. It found that the risks of any material supply-side impacts to its operations are low.

Guidance update.

In light of the above, NEXTDC has reaffirmed the FY 2020 revenue and underlying EBITDA guidance it provided with its half year results last month.

Revenue is expected in the range of $200 million to $206 million, with underlying EBITDA in the range of $100 million to $105 million.

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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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