InterXion Holding NV (INXN) experienced solid growth in Europe despite tough macroeconomic conditions in the region. Todd C. Weller, Managing Director at Stifel, Nicolaus & Co., Inc., says the secular growth in carrier-neutral colocation outweighed European declines, and he says INXN is his top pick in the sector.
“They’re in 11 countries in Europe. Again, they provide space and power, but the value proposition is that if you put your IT infrastructure in one of their data centers, you’re going to get access to lots and lots of networks over there. That’s important for latency-sensitive applications. A back-office financial application doesn’t need access to hundreds of networks, but if you’re an online gaming site you do, because the performance is important,” Weller said.
Weller says InterXion is trading at a discount to competitor TeleCity Group Plc (LON:TCY), even as the stock saw more multiple expansion in 2012 relative to some of the data center REITs. He says that the move toward a REIT-like structure is a possibility for the company, but he says that is long-term and the upside may be expected to come from other strategies.
“We think InterXion is well-positioned to get its fair share. From a fundamental perspective, 2012 was a big year of capacity growth for them — they were capacity-constrained in 2011 — about 18% capacity growth is expected in 2012, so we think that gives them a good ability to accelerate growth in 2013,” Weller said.
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