Stifel maintains buy rating on Digital Realty Trust stock

On Thursday, Stifel analysts reaffirmed their Buy rating and maintained a $190.00 price target for Digital Realty Trust (NYSE: NYSE:DLR), a prominent player in the Specialized REITs industry with a market capitalization of $60.4 billion. According to InvestingPro analysis, the stock is currently showing overbought signals, though analysts maintain an overall positive consensus. This decision follows a meeting with the company’s management at the Nareit REITweek conference, where analysts gained a positive perspective on the demand environment and the company’s growth prospects.

Stifel highlighted Digital Realty’s strong leasing performance in the first quarter and noted the momentum in its business. The company, which has maintained dividend payments for 22 consecutive years with a current yield of 2.77%, is expected to achieve another year of strong results, consistent with last year’s record levels, driven by a robust pipeline of deals across retail and hyperscale sectors.

The analysts expressed confidence in Digital Realty’s earnings growth visibility, citing the company’s record and growing backlog. They emphasized the firm’s balance sheet strength, supported by a healthy current ratio of 1.66 and liquid assets exceeding short-term obligations as reported by InvestingPro, its capability to access and deliver large-capacity blocks in key locations, and the recently announced Hyperscale fund as factors that should alleviate funding pressures.

Tariffs remain a topic of discussion, but Stifel believes that Digital Realty has navigated these challenges better than most in the industry. The analysts view the company’s position in AI and its pricing leadership as key factors contributing to its growth potential.

Digital Realty’s ability to lead in pricing and its strategic initiatives are expected to drive further growth in cash flow from operations per share next year, according to Stifel’s assessment.

In other recent news, Digital Realty announced its second-quarter dividends for 2025, with a cash dividend of $1.22 per share for common stockholders, payable at the end of June. The company also declared dividends for several series of preferred stock, with payments scheduled for the same date. Additionally, Digital Realty reported its first-quarter 2025 financial results, highlighting a 6% year-over-year increase in core funds from operations (FFO) per share to $1.77 and a 7% rise in data center revenue. Despite missing earnings per share forecasts, the company raised its full-year core FFO guidance to a range of $7.05 to $7.15 per share.

JMP Securities maintained a Market Outperform rating on Digital Realty, with a price target of $220.00, following the first-quarter results. The firm’s revenue projections and funds from operations estimates were adjusted due to foreign exchange headwinds and lower power pass-through revenue. However, the adjusted funds from operations (AFFO) per share estimate for 2025 was revised upwards, thanks to lower-than-expected capital expenditures. Digital Realty continues to experience strong demand from AI-related projects, which account for over two-thirds of total leasing, and has expanded its global footprint with new data centers, including a recent entry into the Indonesian market.

The company also announced the formation of its first U.S. hyperscale data center fund, aiming to support approximately $10 billion of hyperscale data center investments. This initiative is expected to enhance Digital Realty’s returns and support customer demand. Despite economic uncertainties, the company remains optimistic about its growth prospects, supported by a record backlog of signed but not commenced leases.

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