NextDC's underlying earnings (EBITDA) for the 1H slightly beat Morgans estimate due to lower than expected expenses.

Management has raised FY23 capex guidance due largely to new site acquisitions, which helps underpin long-term growth, according to the analyst.

The maintenance of underlying earnings guidance was effectively an upgrade, as it includes higher opex due to holding costs of the newly purchased sites, explains the broker.

Morgans expects material contract wins in the next six months and maintains its Add rating. The target slips to $13.00 from $13.30 as the broker adopts a higher risk-free rate.

Sector: Software & Services.

Target price is $3.00.Current Price is $10.27. Difference: ($7.27) - (brackets indicate current price is over target). If NXT meets the Morgans target it will return approximately -242% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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