How are energy investors positioned?
Tuesday
Raymond (NSE:RYMD) James has reiterated a Strong Buy rating and a $190.00 price target for Digital Realty Trust (NYSE:DLR), following a presentation by the company’s VP of Investor Relations, Jim Huseby, at the Institutional Investors Conference in Orlando. The firm’s analyst noted robust demand for data centers and expressed confidence in the company’s outlook for 2025 and beyond, citing solid bookings.
During the conference, it was highlighted that Digital Realty is effectively managing demand for both large hyperscale deployments and smaller colocation spaces. The company has not experienced any contract cancellations, specifically from Microsoft (NASDAQ:MSFT), and views concerns related to DeepSeek as overblown. Digital Realty’s approach aligns with historical patterns where technological innovation spurs further advancements.
Furthermore, Digital Realty is expected to continue its growth while also deleveraging. The company’s use of private capital and joint ventures has strengthened its balance sheet, providing it with the leverage to meet increasing client demand. Impressively, bookings in 2024 have laid a strong foundation for achieving revenue and core FFO targets in 2025.
The analyst concluded that the persistent demand for data centers, driven by the ongoing digitization of enterprise and consumer activities, positions Digital Realty favorably. The company is poised to benefit from the surge in AI applications, both in the near term with large AI teaching modules and in the longer term with inference workloads.
In other recent news, Digital Realty Trust reported fourth-quarter earnings that surpassed analyst expectations, with adjusted funds from operations (FFO) reaching $1.73 per share, beating the consensus estimate of $1.63. Revenue for the quarter was $1.44 billion, showing a 5% year-over-year increase, although slightly below the projected $1.46 billion. Despite these strong results, the company issued a softer-than-expected revenue forecast for 2025, estimating between $5.8 billion and $5.9 billion, which is below Wall Street’s consensus of $6.13 billion.
JPMorgan responded by raising its price target for Digital Realty Trust from $185 to $190, maintaining an Overweight rating, citing strong colocation and interconnection bookings. Jefferies adjusted its price target to $218 from $226 while keeping a Buy rating, noting a downturn in new leasing activity within the hyperscale segment but highlighting record colocation leasing driven by AI demand. JMP Securities reaffirmed its Market Outperform rating with a price target of $220, emphasizing the company’s strength in hyperscale cloud computing and AI deployments.
Overall, analysts from firms such as JMP Securities, JPMorgan, and Jefferies expressed confidence in Digital Realty’s strategic positioning and potential for growth, despite the conservative guidance for 2025.
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