Interxion Holding NV (INXN) is an attractive player in the network-dense colocation space, poised to benefit from significant capacity growth while also eyeing margin expansion potential, says Todd Weller, Managing Director at Stifel, Nicolaus & Co., Inc.
“Interxion is our top pick, and aside from liking the network-dense colocation space for the reasons we discussed earlier, we view Interxion as an established operator in Europe. We see an attractive fundamental story, as the company should benefit this year from significant capacity growth they experienced in 2012,” Weller said.
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Weller believes INXN has margin expansion potential, has an attractive valuation when compared to peers and is also being viewed as a consolidation candidate, further cementing Weller’s bullish take on the network-dense colocation space.
“We remain most bullish on network-dense colocation, because it is a beneficiary of various secular drivers like mobile, cloud, growth of Internet, social media, etc., and it’s been — you’re kind of making a play on the broad cloud theme as opposed to, you know, making a play on a single service provider, and then again I would emphasize the higher barriers to entry in that area. And so shares of Interxion, INXN, a European network-dense colocation provider, remains our top pick,” Weller said.