Digital Realty Upgraded on Robust Data Center Demand

KeyBanc Upgrades Digital Realty to Buy

KeyBanc Capital Markets has upgraded Digital Realty Trust to Buy from a previous Hold rating, increasing its price target to $193 from $187. The move signals growing confidence in the data center sector's performance.

Data Center Market Outlook

The upgrade is rooted in the view that concerns about data center oversupply are premature. According to the analysis, significant power constraints will likely support strong pricing and returns for established operators through 2026. This outlook is bolstered by sustained demand for large power blocks and robust bookings in key US metro markets.

Impact on Digital Realty Stock

This positive revision reflects improving visibility into the company's adjusted funds from operations, known as AFFO, growth. The analyst action points to a bullish sentiment on Digital Realty's capacity to leverage high demand for digital infrastructure, which could positively influence the stock and the broader data center REIT industry.

Summary

The upgrade from KeyBanc suggests that structural market factors, especially power availability, will shield major players like Digital Realty from oversupply risks. Market participants will now watch to see if the company's financial performance aligns with these heightened growth expectations.

FAQ

Q: Why was Digital Realty's stock upgraded?
A: Digital Realty was upgraded due to strong data center demand, the belief that power constraints will limit oversupply, and clearer visibility into its future earnings growth.

Q: What is the new price target for Digital Realty?
A: KeyBanc set a new price target of $193 for Digital Realty, up from the previous target of $187.

Source: Investing.com