Benchmark Comments On Equinix Following Earnings Report

Equinix

reported strong 1Q11 results with revenue up 22% organically. EBITDA at $167 million, was $15 million ahead of the street. Benchmark increases its 2011 estimates, driving the price target to $115 from $105 and maintains a Buy rating. Equinix's 1Q11 beat was due to better-than-expected revenue, both recurring and nonrecurring. Expense savings that may not fully recur also contributed. As such, some of the beat will not flow through to the rest of the year. Pricing remains firm across all regions, with Asia showing some pricing strength due to strong interconnection growth, an accelerating digital economy, and appreciating currency. Equinix believes it will complete the hiring of its new salesforce in 2Q11. The new salesforce could start adding to growth by 4Q11, with the full impact coming in 2012 and 2013. Some of the 1Q expense savings will not recur, in part due to the salesforce ramp. Equinix materially increased 2011 capex guidance, with expansion capex increasing by $75 million. Equinix announced it is making meaningful expansions in four of its largest markets, NY, Chicago, Paris and Frankfurt, which combined will cost $140 million and add 2,200 to cabinet capacity. Equinix closed Wednesday at $96.60