Truist cuts Digital Realty Trust target to $185, maintains buy

Monday - Truist Securities adjusted its outlook on Digital Realty Trust (NYSE:DLR) shares, reducing the price target from $201.00 to $185.00 while keeping a Buy rating on the stock. The stock, currently trading at $146.17, has seen a 15.88% decline year-to-date, though InvestingPro data shows its RSI indicates oversold territory, potentially presenting an opportunity for investors. The revision follows the company’s fourth-quarter results for 2024. Truist analyst Anthony Hau updated his 2025 Core Funds From Operations (FFO) estimate to $7.07 per share, up from the previous $7.05 per share, aligning with the management’s guidance range of $7.00 to $7.10 per share.

The firm’s projections for Digital Realty Trust’s 2026 Core FFO remain unchanged at $7.88 per share. These estimates suggest a year-over-year growth of 5.3% for 2025 and 12% for 2026, with an average increase of 9.8% anticipated through 2029. As a prominent player in the Specialized REITs industry, Digital Realty has maintained dividend payments for 22 consecutive years, currently offering a 3.27% yield. InvestingPro analysis reveals the company maintains strong liquidity with a current ratio of 1.42.

The new price target of $185 is based on a combination of valuation methods. One-third of the valuation is derived from a discounted cash flow estimate of $225.14, another third from the projected Net Asset Value (NAV) a year from now, and the final third from a 20x multiple of the next twelve months’ Adjusted Funds From Operations (AFFO).

According to Truist Securities, the revised price target represents a total return potential of 27.9%, which includes a projected dividend yield of 3.3%. The target price also corresponds to 25 times the next twelve months’ adjusted EBITDA and 30 times the estimated AFFO for 2025. At present, Digital Realty Trust’s stock is trading at 21 times the next twelve months’ EBITDA and 24 times the estimated AFFO for 2025. For a deeper understanding of Digital Realty’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 8 additional ProTips and detailed financial metrics in the Pro Research Report.

In other recent news, Digital Realty Trust has been the focus of several analyst evaluations following its recent financial disclosures and guidance for 2025. JPMorgan increased its price target for Digital Realty to $190, maintaining an Overweight rating, citing strong colocation and interconnection bookings despite a drop in large-scale deals. The company’s guidance for 2025 includes an expected revenue increase to between $5.8 and $5.9 billion and an adjusted EBITDA of $3.1 to $3.2 billion, reflecting a steady growth trajectory. Meanwhile, Jefferies adjusted its price target to $218, keeping a Buy rating, and highlighted a surge in colocation leasing due to rising demand for AI applications.

JMP Securities reiterated its Market Outperform rating with a $220 price target, emphasizing Digital Realty’s robust performance in hyperscale cloud computing and AI deployments. Although fourth-quarter 2024 bookings decreased from the previous quarter, they aligned with expectations and underscored ongoing sector growth. Raymond (NSE:RYMD) James also maintained a Strong Buy rating with a $190 target, expressing confidence in Digital Realty’s outlook and its ability to manage demand effectively. Analysts noted the company’s strategic use of private capital and joint ventures, which has strengthened its balance sheet.

Digital Realty’s ability to implement price increases and navigate foreign exchange headwinds was also acknowledged by JMP Securities, which sees potential for the company to exceed its guidance. The consistent demand for data centers, driven by AI and digital transformation, positions Digital Realty favorably for future growth. As analysts weigh in on the company’s performance and prospects, Digital Realty continues to be seen as a key player in the digital infrastructure market.

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