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Investing.com - Equinix (NASDAQ:EQIX) shares dropped 9% to $824.31 following the company’s analyst day where it revealed a reduced growth forecast for the coming years. According to InvestingPro, the data center giant, valued at $81 billion, appears overvalued at current levels.
The data center company lowered its calendar year 2025-2029 adjusted funds from operations (AFFO) per share growth outlook to 5-9%, down from its previous target of 7-10%. While Evercore ISI maintained its Outperform rating and $1,035.00 price target, InvestingPro data shows the company maintains a solid financial health score of GOOD, with revenue growing at 5.82% over the last twelve months.
The company attributed the lower AFFO per share growth to higher interest rate assumptions on debt refinancing and new debt, creating approximately a 100 basis point headwind, along with increased capital expenditures to support its "Build Bolder" strategy, which adds roughly a 200 basis point headwind. Analyst consensus remains bullish, with price targets ranging from $837 to $1,200. Get deeper insights and access to comprehensive financial metrics with InvestingPro’s exclusive research report.
Equinix outlined a $250 billion total addressable market by 2029, representing approximately 15% compound annual growth rate, with strong demand driven by artificial intelligence ($94 billion), hybrid multi-cloud ($94 billion), and networking ($60 billion). The company specifically noted that the AI market is expected to grow at a 23% compound annual growth rate over the next four years. With current EBITDA of $3.67 billion and a P/E ratio of 92.59, investors can access detailed valuation metrics and growth potential analysis through InvestingPro’s comprehensive research tools.
The company’s "Build Bolder" initiative aims to double current capacity by 2029, while its xScale 1.0 program, requiring $8-10 billion in capital expenditures, is expected to contribute 4-5% growth in AFFO per share, though financial contributions from the xScale 2.0 program were not disclosed.
In other recent news, Equinix has been the focus of several analyst evaluations following its 2025 Analyst Day event. Goldman Sachs reiterated its Buy rating on Equinix, maintaining a $1,020 price target, despite the company’s stock experiencing a decline due to its financial outlook and aggressive investment plans. Equinix projected a compound annual growth rate of 5%-9% for adjusted funds from operations through 2029. However, BMO Capital downgraded Equinix from Outperform to Market Perform, lowering its price target to $850, citing a subdued growth outlook and significant capital expenditures. Raymond (NSE:RYMD) James also downgraded Equinix to Market Perform, expressing concerns about the company’s multi-year business transformation and increased capital expenditures. Meanwhile, Citizens JMP maintained a Market Outperform rating with a $1,200 price target, noting Equinix’s potential strategic moves to strengthen its position in the wholesale segment. Stifel analysts reaffirmed their Buy rating and $1,050 price target, highlighting Equinix’s strong market position and positive demand trends, especially in AI-related areas. These recent developments reflect varying perspectives on Equinix’s strategic direction and financial outlook.
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