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Earnings preview: What to expect from the NEXTDC FY 2020 result

The NEXTDC Ltd (ASX: NXT) share price has been among the best performers on the S&P/ASX 200 Index (ASX: XJO) in 2020.

Since the start of the year the data centre operator’s shares have risen an impressive 77%.

In light of this, expectations are very high ahead of its full year results release at the end of the month.

In order to keep readers informed, I thought I would take a look to see what the market is expecting from NEXTDC in FY 2020.

What is the market expecting from NEXTDC in FY 2020?

According to a note out of Goldman Sachs, its analysts expect NEXTDC to deliver a 14% increase in revenue to $203 million. This sits in the middle of the company’s guidance of $200 million to $206 million given in May.

In respect to its earnings, the broker is forecasting earnings before interest, tax, depreciation, and amortisation (EBITDA) of $103 million. This will be a 21% increase on the prior corresponding period and, once again, sits in the middle of its EBITDA guidance range of $100 million to $105 million.

What else should investors look out for?

In addition to the above, Goldman Sachs has suggested investors look out for enterprise contracts.

It commented: “With +12MW of M2 Hyperscale contracts announced, we will be focused on new Enterprise MW and any Covid-19 related acceleration, noting that NXT also signed a major bank contract during the half.”

The broker also has its eyes on pricing and returns. Goldman explained: “We will focus on the impact of S2 [Sydney 2] contracts on NXT’s blended MW/pricing, along with growth in cross connects, noting Equinix delivered one of its strongest interconnect quarters on record in the Jun qtr.”

Finally, its analysts will be looking for commentary on recent expansions and future plans.  

It said: “We look for details on P2’s [Perth 2] opening performance, M3 [Melbourne 3] land acquisition, international expansions, and any updates on potential joint ventures / funding structures for these projects.”

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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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