NextDC's Stock Decline Is Not Indicative of a Downturn in the Firm's Performance or Prospects

The broad market decline and pressure on real estate investments resulting from higher interest rates both pressured NextDC’s stock during 2022. Unlike most REITs, however, NextDC does not pay a dividend, so it has not been a stock in which to hide amid low interest rates. Instead, it is a growth stock, and we think it has a very manageable debt profile, with a leverage ratio below most data center peers. The stock only trades at a 17% discount to our AUD 11 fair value estimate, but we think it is worthwhile for investors who want exposure to the Australia data center market.