Digital Realty Receives a Buy from Barclays

By Carrie Williams

Barclays analyst Ross L Smotrich reiterated a Buy rating on Digital Realty (NYSE: DLR) yesterday and set a price target of $118. The company’s shares opened today at $91.59.

L Smotrich wrote:

“We are updating our model to reflect 3Q16 results. DLR posted core-FFO/sh of $1.44 (+9.5% YoY), which missed our estimate ($1.47) but matched consensus ($1.44). The miss relative to our estimate was driven by both higher G&A expense and currency headwinds. Reported FFO/sh, which includes non-recurring items, was $1.31. Management suggested that 2017 FFO/CAD growth could decelerate from a strong year in 2016 (we model +8.1% FFO growth in 2016 & +5.1% in 2017) given tougher comps and ongoing FX headwinds associated with a strengthening dollar. The dollar strength was already a drag on 3Q16 results, and we model an additional $0.06/sh drag during 2017 based on additional dollar appreciation since quarter-end. Please see our 10/28/2016 DLR – Initial View – Third Quarter 2016 for further details. Earnings Conference Call Takeaways. New leasing volume accelerated in the quarter despite a sales management transition. We think the data center demand backdrop remains robust, driven by cloud adoption, internet of things, mobile usage, etc. – we expect this to continue in 2017 and beyond. We also believe that DLR has successfully grown the global business via large acquisitions, allowing for a deeper product offering and more repeat business. While we are not ruling out the possibility of another large acquisition, our expectation is that management continues to focus on integrating Telx and the acquired Equinix European assets.”

According to TipRanks.com, Smotrich is a 5-star analyst with an average return of 8.8% and a 65.7% success rate. Smotrich covers the Financial sector, focusing on stocks such as Pennsylvania Real Estate Investment, Newcastle Investment Corp., and General Growth Properties.

Digital Realty has an analyst consensus of Strong Buy, with a price target consensus of $109.33.

The company has a one year high of $113.21 and a one year low of $69. Currently, Digital Realty has an average volume of 1.75M.

Based on the recent corporate insider activity of 17 insiders, corporate insider sentiment is negative on the stock. Most recently, in September 2016, Joshua Mills, the SVP & GC of DLR sold 4,519 shares for a total of $416,742.

Digital Realty Trust, Inc. operates as a real estate investment trust. It owns, acquires, develops and manages technology-related real estate. The company conducts its business and owns its assets through Digital Realty Trust L.P. Its solutions includes: Turn-Key Datacenters, Digital Consulting Services, Build-To-Suit Datacenters, Buy-To-Suit /Sale-Leaseback Datacenters, Powered Base Buildings and Critical Facilities Management. Digital Realty Trust was founded on March 9, 2004 and is headquartered in San Francisco, CA.