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On Tuesday, JMP Securities reaffirmed their Market Outperform rating on Digital Realty Trust (NYSE:DLR) with a steady price target of $220.00. The research firm highlighted the company's robust performance, emphasizing the persistent strong demand for data center capacity and Digital Realty’s capability to implement price increases.
The firm acknowledged that Digital Realty's full-year 2025 guidance was marginally below JMP Securities' expectations and the broader market consensus. This conservative forecast is attributed primarily to the impact of foreign exchange headwinds. However, JMP Securities posits that there is potential for the company to outperform its guidance. Notably, InvestingPro analysis reveals that Digital Realty has maintained dividend payments for 21 consecutive years, currently offering a 2.97% yield.
Analysts at JMP Securities expressed optimism about the stock's valuation, noting that at approximately 22.7 times the estimated adjusted funds from operations (AFFO) for 2026, Digital Realty shares remain an attractive investment. They anticipate that the stock's multiple could expand, driven by mid-single-digit growth in both revenue and AFFO. The company maintains a solid gross profit margin of 54% and operates with a relatively low beta of 0.65, indicating lower volatility compared to the broader market. Additionally, strong industry tailwinds, particularly from the burgeoning field of Generative AI, are expected to contribute to the company's positive trajectory. For a deeper analysis of Digital Realty's valuation and growth prospects, investors can access comprehensive research reports on InvestingPro, which offers exclusive insights and financial metrics.
Digital Realty Trust is a real estate investment trust (REIT) that specializes in data center and colocation services. Data centers are critical infrastructure for the storage, management, and dissemination of data, and as such, the industry is experiencing significant demand, particularly with the rise of cloud computing and artificial intelligence technologies.
The reaffirmation of the Market Outperform rating and the $220.00 price target by JMP Securities underscores their belief in Digital Realty's ability to capitalize on the growing demand for data center services and navigate the challenges posed by the current economic environment.
In other recent news, Digital Realty Trust has been the subject of several analyst reports. JPMorgan's Richard Choe raised the firm's price target for Digital Realty Trust to $190, following the company's release of its fourth-quarter 2024 earnings and 2025 fiscal year guidance. Despite reporting lower-than-expected earnings for the fourth quarter of 2024, the company's forecast for 2025 was received positively, with strong colocation and interconnection bookings totaling $76 million.
Conversely, Jefferies' analyst Jonathan Petersen reduced the price target on Digital Realty Trust shares to $218, citing a downturn in new leasing activity within the hyperscale segment. However, Petersen highlighted a record-setting $76 million in colocation leasing due to increasing demand for artificial intelligence applications.
Meanwhile, JMP Securities maintained a steady price target of $220 on Digital Realty Trust, emphasizing the company's strength in hyperscale cloud computing and AI deployments. Despite a quarter-on-quarter decrease in bookings, the results aligned with JMP Securities' projections.
These recent developments come after Digital Realty Trust reported fourth-quarter earnings that exceeded analyst expectations. The company reported adjusted funds from operations (FFO) of $1.73 per share and revenue of $1.44 billion. However, the company's 2025 revenue guidance was softer than expected, forecasting a range of $5.8-$5.9 billion.
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