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On Friday, JMP Securities reiterated its Market Outperform rating on Digital Realty Trust (NYSE:DLR) with a steady price target of $220.00. The firm's analysis highlights Digital Realty Trust's fourth-quarter 2024 performance, underlining the company's strength in hyperscale cloud computing and AI deployments. With a market capitalization of $55.7 billion and trailing twelve-month revenue of $5.4 billion, Digital Realty stands as a prominent player in the Specialized REITs industry, according to InvestingPro data. Despite a quarter-on-quarter decrease in bookings from a record $520M in the third quarter of 2024 to $100M in the fourth quarter, the results were aligned with JMP Securities' projections.
Greg Miller, an analyst at JMP Securities, noted the consistent demand for hyperscale cloud services, indicating that companies remain skeptical of alternative solutions like those proposed by China's DeepSeek. While the fourth-quarter bookings did not reach the heights of the previous quarter, they were still considered robust and indicative of the sector's ongoing growth trajectory.
Miller also addressed the challenges of assessing a company's progress in digital infrastructure within a limited 90-day period. He expressed that such short-term evaluations might not fully capture the company's advancements. Nonetheless, he acknowledged that the current results suggest Digital Realty is on course to be a leading provider in the digital infrastructure industry.
Digital Realty Trust's performance is reflective of the broader industry trend, where the demand for hyperscale cloud and AI solutions continues to surge. The company's consistent bookings and strategic positioning appear to reinforce its status as a key player in the market.
The affirmation of the $220.00 price target by JMP Securities suggests confidence in Digital Realty Trust's strategy and market position. The company's focus on hyperscale cloud compute and AI deployments is expected to support its growth and maintain its competitive edge in the digital infrastructure sector.
In other recent news, Digital Realty Trust reported fourth quarter earnings surpassing analyst expectations, with adjusted funds from operations (FFO) of $1.73 per share, outperforming the anticipated $1.63. Revenue for the quarter was $1.44 billion, slightly under analyst projections of $1.46 billion but marking a 5% year-over-year increase. However, the company's 2025 revenue guidance was softer than anticipated, forecasting a range of $5.8-$5.9 billion, falling short of Wall Street's consensus estimate of $6.13 billion. Additionally, Digital Realty introduced 2025 constant-currency Core FFO per share guidance of $7.05-$7.15.
CEO Andy Power highlighted 2024 as a significant year for Digital Realty, noting record leasing and growth in the company's revenue backlog. The data center operator recorded total bookings during Q4 expected to yield $100 million of annualized GAAP rental revenue, with a notable $76 million from leases under 1 megawatt plus interconnection. The company ended the quarter with a backlog of $797 million in annualized GAAP base rent. Despite surpassing Q4 expectations, the softer 2025 revenue outlook may impact investor sentiment.
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