Truist Securities launches Iron Mountain stock with buy rating, $95 target

Tuesday, Truist Securities began coverage on Iron Mountain shares (NYSE:IRM), issuing a Buy rating and setting a price target of $95. The firm's analysts believe that the company is on track to achieve approximately 10% annual growth in Adjusted Funds From Operations (AFFO) per share over the next three years. According to InvestingPro data, Iron Mountain has demonstrated solid revenue growth of 12.2% over the last twelve months, with analysts expecting continued profitability this year. The company maintains a strong market position with a market capitalization of $22.8 billion. This growth is expected to be primarily fueled by the expansion of Iron Mountain's Data Center segment, which is anticipated to become a significant contributor to AFFO growth and serve as a catalyst for multiple expansion based on the sum of the parts (SOTP) valuation.

The analysts at Truist Securities have identified several factors that contribute to a favorable risk/reward balance for Iron Mountain's stock. They note that the share price has decreased by 39% from its peak, a decline they attribute to market downturns caused by tariff concerns, a reversal in AI trading, exaggerated worries about government-related challenges, and concerns about the company's capital intensity. InvestingPro analysis reveals the stock has fallen 33.74% over the past six months, with technical indicators suggesting oversold conditions. For deeper insights into Iron Mountain's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. This decline contrasts with the 51% drop experienced during the Global Financial Crisis (GFC).

The coverage initiation comes at a time when Iron Mountain's stock has been under pressure, yet Truist Securities views the current share price as an attractive entry point for investors. The firm's analysis suggests that Iron Mountain's Data Center business is likely to drive the company's AFFO per share growth, which is a key metric for real estate investment trusts (REITs) like Iron Mountain, as it indicates the company's ability to generate cash flow from its operations.

Truist Securities' positive outlook for Iron Mountain is also based on the expectation that the company's data center operations will expand significantly. Data centers are increasingly critical in the digital economy, providing the infrastructure necessary for data storage and cloud services. As demand for these services grows, Iron Mountain's data center division stands to benefit, potentially leading to higher valuations for the company's stock.

In summary, Truist Securities has initiated coverage on Iron Mountain with a Buy rating, setting a price target of $95. The firm's analysts are optimistic about the company's prospects, particularly in the data center market, and they believe the current share price offers an improved risk/reward scenario for investors. Notable strengths identified by InvestingPro include the company's impressive 16-year track record of consistent dividend payments, currently yielding 4.05%, and its position as a prominent player in the Specialized REITs industry. InvestingPro subscribers have access to 14 additional ProTips and extensive financial metrics to make more informed investment decisions.

In other recent news, Iron Mountain Incorporated reported its fourth-quarter 2024 earnings, which showed a slight miss on earnings per share (EPS), posting $0.50 against an analyst forecast of $0.51. The company's revenue for the quarter was $1.58 billion, falling short of the expected $1.6 billion. Despite these misses, Iron Mountain demonstrated strong growth in its Data Center business, which increased by 25% to $620 million for the year. UBS analyst Kevin McVeigh maintained a Sell rating on Iron Mountain, citing concerns about the company's high valuation and the capital-intensive nature of its operations. McVeigh noted that Iron Mountain's data center revenue accounts for about 10% of its total revenue, with the company expected to require additional capital for expansion. In leadership news, Iron Mountain appointed Gary Aitkenhead as Executive Vice President and General Manager of its Data Centers division, bringing significant experience to the role. Additionally, the company updated its federal income tax considerations for its REIT status, ensuring that shareholders are informed about the tax implications of holding Iron Mountain's shares. These developments reflect Iron Mountain's ongoing efforts to manage growth and financial expectations.

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