Downgrade: Here's How Analysts See NEXTDC Limited (ASX:NXT) Performing In The Near Term
Market forces rained on the parade of NEXTDC Limited (ASX:NXT) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
After this downgrade, NEXTDC's 15 analysts are now forecasting revenues of AU$605m in 2027. This would be a huge 22% improvement in sales compared to the last 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of AU$0.32 per share in 2027. Yet prior to the latest estimates, the analysts had been forecasting revenues of AU$782m and losses of AU$0.26 per share in 2027. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for NEXTDC
The consensus price target fell 44% to AU$10.93, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NEXTDC's past performance and to peers in the same industry. It's clear from the latest estimates that NEXTDC's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 27% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, NEXTDC is expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that NEXTDC's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of NEXTDC.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with NEXTDC, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.
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