Digital Realty Trust stock rating upgraded by Wolfe Research to Outperform

Investing.com - Digital Realty Trust (NYSE:DLR) received an upgrade from Wolfe Research on Monday, with its rating raised from Peerperform to Outperform and a price target set at $194.00. The company, currently trading at a P/E ratio of 44.85 and showing strong financial health according to InvestingPro metrics, has maintained consistent profitability over the last twelve months.

Wolfe Research cited "compelling secular growth dynamics and attractive risk-adjusted returns" as key factors behind the upgrade, which implies approximately 16% total return potential including five quarterly dividend payments of $1.22 each. The company has maintained dividend payments for 22 consecutive years, with a current dividend yield of 2.83%.

The research firm noted that data centers have become more valuable due to "addition by subtraction" in the REIT sector, as other segments like single family rental, industrial, and multifamily properties face potential challenges from lower employment growth.

Wolfe Research also highlighted that recent "events around cell tower credit/SATS spectrum sales have further increased scarcity value for data center REITs" in their investment landscape.

The firm views the current market situation as creating "an attractive entry point" for Digital Realty Trust, noting that data centers have been "one of the worst-performing REIT subsectors year-to-date."

In other recent news, Digital Realty Trust has been the focus of several notable developments. The company announced a strategic collaboration with Dell Technologies and DXC Technology to enhance enterprise AI infrastructure. This partnership leverages Digital Realty’s PlatformDIGITAL, Dell’s AI Factory technology, and DXC’s services to offer integrated AI solutions. Additionally, Digital Realty’s board approved the 2025 Carried Interest Plan, aiming to attract and retain executives by offering performance-linked incentives. This plan involves carried interest and appreciation interest awards for employees involved in strategic capital ventures.

In the realm of analyst ratings, Morgan Stanley initiated coverage on Digital Realty Trust with an Equalweight rating and a $195.00 price target, indicating potential growth. Meanwhile, BMO Capital reiterated an Outperform rating for the company, maintaining the same price target, despite recent challenges faced by data center stocks due to higher interest rates. These developments highlight the company’s strategic moves and the confidence analysts have in its potential growth.

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