UPDATE: Citigroup Lowers PT on Digital Realty Trust on Lack of Catalysts

In a report published Monday, Citigroup analyst Michael Bilerman reiterated a Neutral rating on Digital Realty Trust DLR, but lowered the price target from $69.00 to $64.00.

In the report, Citigroup noted, “Digital Realty (DLR) dropped 7.5% on Friday putting the shares down 12% for the year versus REITs up 10%. This places the stock at the most attractive relative valuation to REITs on an implied cap rate basis since 2006 and the biggest gap on an FFO multiple basis in its history. Unfortunately valuation in of itself is not a catalyst for change. This is especially true for a stock that trades at a premium to private market values, is dependent on the capital markets to fund its growth, is active in a sector where fundamentals are off their highs and for a company that has damaged its credibility and lost investors' confidence. Short interest has also grown to ~20%, ticking up steadily since a large hedge fund publically announced a short position in the stock saying its worth $19/sh. While we are attracted and intrigued by current valuation and the potential for a short squeeze – we think the shares could be range bound for some time especially as catalysts for reversal are difficult to identify. Within this note we outline our thoughts on DLR's announced accounting changes and reactions to them, delve deeper into DLR's capex disclosure and suggest ways that DLR can improve its disclosure and communication with the Street. We maintain our Neutral view on the stock. Target to $64.”

Digital Realty Trust closed on Friday at $58.28.