Maintaining Hold on Digital Realty Amid Solid Performance and Cautious Outlook

In a report released today, Michael Elias from TD Cowen maintained a Hold rating on Digital Realty (DLR – Research Report), with a price target of $120.00.

Michael Elias has given his Hold rating due to a combination of factors that suggest a steady but not necessarily exciting outlook for Digital Realty. The company has reported solid results for the second quarter of 2024, with leasing figures that align with expectations and a maintained guidance for the year. While there is an indication of continued strength in hyperscale demand, which could potentially lead to another impressive leasing quarter, there are no immediate catalysts that would drive stock excitement. This tempered outlook is further influenced by the expectation that Street Core-FFO/share growth estimates for 2025 will likely be adjusted downward to around 5%, reflecting an anticipation of higher near-term capital expenditures.

Additionally, despite a robust demand pipeline and a significant deal signed in Texas, management’s cautious tone when discussing the possibility of a record leasing quarter adds to the reasons for the Hold rating. Although there is optimism around activity levels, management has hedged their predictions with caveats that suggest the record could be in terms of reported bookings or activity inclusive of joint ventures. With these factors and the current valuation of Digital Realty’s stock in mind, Michael Elias advises a neutral stance, suggesting that investors should not be quick to either buy or sell, but rather watch for how these dynamics play out in the near future.

According to TipRanks, Elias is an analyst with an average return of -1.9% and a 52.27% success rate. Elias covers the Real Estate sector, focusing on stocks such as DigitalBridge Group, Crown Castle, and Digital Realty.

In another report released on July 23, Morgan Stanley also maintained a Hold rating on the stock with a $111.00 price target.

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Digital Realty (DLR) Company Description:

California-based Digital Realty Trust, Inc. is a real estate investment trust, which provides data center, colocation and interconnection solutions for domestic and international customers. The company serves across a variety of industry verticals ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products.

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