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Investing.com - BMO Capital downgraded Equinix (NASDAQ:EQIX) from Outperform to Market Perform on Thursday, while reducing its price target to $850.00 from $1,045.00. The stock, currently trading at $824.31, has pulled back significantly from its 52-week high of $994.03. According to InvestingPro data, Equinix maintains a "GOOD" overall financial health score, with particularly strong marks in cash flow management.
The downgrade follows Equinix’s Analyst Day presentation, which highlighted significant long-term growth opportunities but delivered a forecast that BMO Capital described as underwhelming. The data center company projected adjusted funds from operations (AFFOps) growth of 5-9% for the period 2025-2029, with 2026 growth expected at the lower end of that range. This forecast aligns with the company’s recent performance, as InvestingPro data shows revenue growth of 5.82% over the last twelve months and EBITDA of $3.67 billion.
BMO Capital noted that higher investments are weighing on Equinix as the company builds larger facilities to position itself for artificial intelligence inference demand. While the analyst firm acknowledges that growth should accelerate long-term, potentially exceeding 10% by 2030, near-term growth is expected to be more subdued.
The research firm cited the lower growth outlook and few upcoming catalysts as reasons for moving to the sidelines on Equinix. BMO Capital indicated a preference for Digital Realty (NYSE:DLR) Trust within the data center sector, which it continues to rate as Outperform.
Equinix, a global provider of data center and interconnection solutions, has been expanding its infrastructure to capitalize on growing demand for digital services and AI applications, but faces near-term pressure on growth metrics according to the analyst assessment.
In other recent news, Equinix has announced the issuance of €1.5 billion in senior notes, divided between notes due in 2029 and 2034. The proceeds are intended to finance or refinance eligible green projects, with the option to use them for general corporate purposes until fully allocated. In analyst updates, Citizens JMP maintained its Market Outperform rating for Equinix with a $1,200 price target, noting the company’s potential expansion in the wholesale/hyperscale business segment. Meanwhile, Raymond (NSE:RYMD) James downgraded Equinix to Market Perform, citing challenges associated with the company’s multi-year business transformation aimed at doubling capacity and capturing AI demand. Stifel analysts reaffirmed their Buy rating with a $1,050 price target, highlighting sustained demand and positive pricing trends discussed at the Nareit REITweek conference. Equinix’s management emphasized the company’s strong position in artificial intelligence and its efforts to improve margins and capture AI momentum. JMP Securities also reiterated a Market Outperform rating, setting a $1,200 price target based on anticipated growth driven by AI demand. These developments reflect Equinix’s strategic moves and market positioning amid evolving industry dynamics.
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