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On Wednesday, Citi analysts, led by Michael Rollins, adjusted the price target for Digital Realty Trust (NYSE:DLR) shares, reducing it to $188 from the previous $212, while still holding a Buy rating on the stock. Currently trading at $148.66, the company is showing signs of overvaluation according to InvestingPro Fair Value metrics. The revision follows an update to their financial model, which now incorporates the fourth quarter of 2024 results and changes to their forward-looking projections. Analyst targets for the stock range widely from $113 to $220, reflecting diverse market opinions. For comprehensive analyst coverage and detailed valuation metrics, investors can access the Pro Research Report, available exclusively on InvestingPro.
Digital Realty Trust, a $50.05 billion market cap company specializing in data center and colocation services, is expected to continue its strong performance in the less than 1 megawatt (MW) leasing segment. With annual revenue of $5.43 billion and a gross profit margin of 53.65%, the firm also anticipates sustained favorable leasing activity in the hyper-scale market, which involves contracts over 1 MW.
The analysts predict that leasing for deals over 1 MW will likely be more concentrated in the latter half of 2025. This is due to a high level of pre-leasing in Digital Realty Trust’s development pipeline. Nonetheless, Citi does not dismiss the possibility of a notably stronger performance in the second quarter of the year.
The adjustment in the price target also reflects an anticipated increase in development within joint venture structures. According to Rollins, while the growth figures for Digital Realty Trust in 2025 may seem modest, they potentially underestimate the actual opportunities available to the company. This is attributed to the ongoing effects of capital recycling, a process where companies sell older assets to fund the acquisition or development of newer ones.
In closing, Rollins reaffirmed the firm’s positive stance on Digital Realty Trust shares, encouraging investors to consider buying into the company despite the moderated price target. InvestingPro analysis reveals several key strengths, including a 22-year track record of consistent dividend payments and liquid assets exceeding short-term obligations. Additional ProTips and detailed financial metrics are available through the comprehensive Pro Research Report, offering investors deeper insights into the company’s performance and outlook.
In other recent news, Digital Realty Trust has been the focus of several analyst updates following its fourth-quarter 2024 earnings release. JPMorgan increased its price target for Digital Realty from $185 to $190, maintaining an Overweight rating, and noted the company’s positive 2025 guidance despite lower-than-expected fourth-quarter earnings. Truist Securities also adjusted its price target for the company, lowering it from $201 to $185 while keeping a Buy rating, and updated its 2025 Core Funds From Operations (FFO) estimate to $7.07 per share. Meanwhile, Raymond (NSE:RYMD) James reiterated a Strong Buy rating with a $190 price target, expressing confidence in the company’s outlook due to strong demand for data centers.
JMP Securities maintained a Market Outperform rating with a $220 price target, highlighting the company’s robust performance and the potential for price increases. Jefferies also adjusted its price target, reducing it to $218 from $226, while maintaining a Buy rating, citing strong colocation leasing activity as a positive indicator. Digital Realty Trust’s guidance for 2025 suggests steady growth, with expected revenue between $5.8 and $5.9 billion and adjusted EBITDA projected to reach $3.1 to $3.2 billion. The company’s strategic focus on colocation and interconnection services is seen as a key driver for its continued growth trajectory.
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