Austin, Texas-based Digital Realty Trust, Inc. (DLR) brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. With a market cap of $46.9 billion, the company owns, acquires, repositions, and manages technology-related real estate.
This REIT has substantially outperformed the border market over the past year. Over the past 52 weeks, DLR stock has surged 25.8%, surpassing the S&P 500 Index’s ($SPX) 19.6% gains. However, DLR’s 11.6% gains on a YTD basis have slightly trailed SPX’s 12% returns over the same time frame.
Zooming in further, DLR has also outpaced the U.S. Digital Infrastructure and Real Estate ETF’s (IDGT) 11.1% returns over the past 52 weeks and 10.4% gains on a YTD basis.
Digital Realty experienced a 2.8% decline on Jul. 25 after the release of its Q2 earnings. Despite exceeding Q2 funds from operations (FFO) per share estimates by 1.2%, the company’s FFO saw a 1.8% annual decline. Although revenues remained stagnant and experienced a slight quarterly decline, an increase in operating expenses and provision for impairment led to a significant 32.1% drop in net income, raising concern among investors.
On a positive note, the company reaffirmed its full-year FFO guidance, providing some reassurance amid the stock price decline.
For the current year, ending in December, analysts expect Digital Realty’s FFO to grow 1.2% year over year to $6.67. The company’s FFO surprise history is mixed. It met or exceeded the consensus estimate in three of the past four quarters while missing the forecasts on another occasion.
Among the 24 analysts covering the DLR stock, the consensus rating is a “Moderate Buy.” That’s based on 14 “Strong Buy” ratings, one “Moderate Buy,” eight “Holds,” and one “Strong Sell.”
This configuration is more bullish than two months ago, with 10 analysts recommending a “Strong Buy.”
On Jul. 25, TD Cowen analyst Michael Elias maintained a “Hold” with a price target of $120.
DLR’s mean price target of $157.27 represents a premium of only 4.8% from current price levels. The street-high target of $188 indicates a potential upside of 25.2%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
