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Investing.com - CFRA downgraded Equinix (NASDAQ:EQIX) from Strong Buy to Buy on Thursday, while reducing its price target to $850.00 from $985.00, citing uncertainty about data center demand. The stock, currently trading at $755.47, has fallen about 12% over the past six months, according to InvestingPro data, which indicates the company is currently overvalued based on its proprietary Fair Value model.
The research firm pointed to concerns about the pace of data center demand, particularly in developing markets outside the United States. CFRA maintained its 2025 funds from operations (FFO) estimate at $27.50 and 2026’s at $30.50, which align with current consensus estimates. With a market capitalization of $74.2 billion and a "GOOD" Financial Health score from InvestingPro, Equinix maintains solid fundamentals despite market challenges.
The downgrade follows Equinix’s investor day on Wednesday, which CFRA said created confusion regarding the company’s long-term growth rate as management provided financial metrics extending to 2029. The firm specifically noted management’s guidance for adjusted FFO growth of only 5% year-over-year in 2026.
CFRA’s new $850 price target represents a forward price-to-FFO multiple of 27.9x, which the firm described as significantly lower than multiples seen over the past two years. The research firm expressed skepticism about Equinix’s ability to raise annualized rental revenue, calling the lack of pricing power "conservative."
Among the challenges CFRA identified for Equinix are timing differences related to capital expenditures on new and expanded data centers, which sometimes experience delays in securing new tenant contracts or achieving targeted occupancy levels. Despite these challenges, Equinix maintains a healthy 49.4% gross profit margin and offers a growing dividend yield of 2.28%. For deeper insights into Equinix’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Equinix has captured attention with several significant developments. The company held its Analyst Day, outlining a total addressable market of approximately $250 billion across AI infrastructure, hybrid and multi-cloud, and networking segments. However, despite optimistic projections, JPMorgan noted disappointing financial guidance, maintaining its Overweight rating but highlighting a potential slowdown in near-term growth. Stifel also adjusted its price target for Equinix to $1,010, citing increased expansion costs and a lower-than-expected growth target for adjusted funds from operations per share (AFFO/sh).
KeyBanc maintained a Sector Weight rating on Equinix, expressing caution due to lowered revenue guidance and increased capital spending plans. Scotiabank (TSX:BNS) reduced its price target to $965, responding to Equinix’s larger-than-expected capital expenditures for AI infrastructure. Similarly, Jefferies lowered its target to $940, acknowledging the company’s strategic shift to accommodate growing AI workload demands. Despite these adjustments, many firms, including Jefferies and Stifel, remain optimistic about Equinix’s long-term potential in the AI sector.
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