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Why 21Vianet Group Stock Jumped on Wednesday

By Daniel Sparks – Jun 17, 2020 at 4:25PM

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One analyst thinks shares of this data center specialist could rise to $25. Here's why.

What happened

Shares of China-based data center company 21Vianet Group (VNET -2.85%) jumped on Wednesday, rising as much as 18.7%. The stock finished the day up a total of 15.9%.

The tech stock's gain was probably primarily driven by an analyst's bullish commentary on the stock.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Jeffries analyst Edison Lee started coverage of 21Vianet stock this week, setting a buy rating for shares. The analyst gave the stock a 12-month price target of $25. 

The analyst believes that growth in China-based internet data centers and broader tailwinds of organizations' digital transformations and a wave of 5G connectivity are opportunities for the company. 

Now what

As a leading carrier- and cloud-neutral internet data services provider in China, 21Vianet is well-positioned to capitalize on growing demand for internet data centers in the market.

The company's recently reported fiscal first quarter highlights the momentum 21Vianet is seeing from tailwinds in China, as management credited its 25% year-over-year revenue growth during the period primarily to "growing demand for data centers in the domestic market, driven by ongoing expansion of corporate digitization across China." But management also said some of the quarter's performance was due to "an uptick in cabinet demand from the company's retail clients as a result of the pandemic."

Investors should should look to see if this momentum continued when 21Vianet reports its fiscal second-quarter results later this year.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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