The NextDC Ltd (ASX: NXT) share price is edging higher on Friday.
In afternoon trade, the data centre operator's shares are up 0.5% to $11.05.
This latest gain has reduced its year to date decline to approximately 13%.
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Is the NextDC share price good value?
While the weakness in the NextDC share price is disappointing for shareholders, it could be a buying opportunity for others.
For example, a recent note out of Citi reveals that its analysts see plenty of upside for the company's shares from current levels.
According to the note, the broker has a buy rating and $14.55 price target on its shares. Based on the current NextDC share price, this implies potential upside of almost 32% for investors over the next 12 months.
What did the broker say?
Citi was pleased with NextDC's half year results last month and highlights improving revenue metrics.
And while it has trimmed its earnings estimates slightly to reflect a slower than expected conversion of its sales pipeline, it remains very positive on the future. Particularly given how its FY 2023 earnings estimates are already largely locked in thanks to NextDC's sales backlog.
The broker explained:
"NXT delivered a strong result with increasing utilisation of Gen 2 assets driving solid revenue growth and margin expansion, while revenue metrics improved HoH (revenue per MW up 7% HoH).
"While the current backlog underpins FY23e earnings, we have lowered our forecasts to reflect a slower ramp and conversion of the pipeline. We maintain our Buy call and see the conversion of Hyperscale customer commitments in Sydney and Melbourne as the next key catalyst (likely in 1H23e)."
All in all, with the NextDC share price trading well off its highs, this broker appears to see it as a buying opportunity for investors.
