Why Chindata Group Holdings Stock Soared 20% Higher This Week

What happened

China-based data center operator Chindata Group (CD) had a week to remember. The company's share price rocketed 20% higher over the period, according to data compiled by S&P Global Market Intelligence. Solid quarterly performance and a subsequent analyst price target increase provided much of that lift.

So what

A big jump in share price often happens when a company not only posts robust growth, but also crushes estimates -- particularly on the bottom line.

That was very much the case with Chindata. The specialty tech company managed to grow its first-quarter revenue by 57% year over year to 1.44 billion yuan ($203 million). Even better, net income flew 168% higher to land at a perch of 253 million yuan ($36 million).

Under non-GAAP (adjusted) standards, Chindata's profit came in at 0.70 yuan ($0.10) per each of its American depositary shares (ADSs), more than double the 0.27 yuan ($0.04) collectively estimated by analysts. Those prognosticators also under-modeled the company's revenue; they were anticipating 1.27 billion yuan ($179 million).

On top of that, Chindata also raised its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for the entirety of 2023. It's now modeling 3.1 billion yuan ($436 million) to 3.22 billion yuan ($453 million). It reiterated its revenue forecast of 5.88 billion yuan ($828 million) to 6.08 billion yuan ($856 million).

Now what

As so often happens when a company trounces estimates, Chindata received a price target increase from an analyst. Specifically, UBS prognosticator Sara Wang lifted hers to an even $12 per ADS from her previous $11.20. She maintained her buy recommendation as she did so.

With the strong tailwind of those first-quarter earnings, investors took Wang's slightly modified outlook to heart. Another analyst, however, went in the opposite direction. Jefferies' Edison Lee clipped his Chindata price target; it's now $10.73, down from $11.59. But Lee remains a bull on the Chinese company, as he too kept his buy recommendation intact.