InterXion Shares Get Mid-Day Pop Following Cowen Upgrade To Outperform

Analysts Colby Synesael, Jonathan Charbonneau and Gregory Williams attributed the upgrade to the strong second-quarter results. The analysts noted that second-quarter revenues, EBITDA and net adds of 5,200 SWM were all ahead of expectations, each representing a record.

Cowen believes the upside was due to strong cloud service provider, CSP, installs. Meanwhile, the company attributed the outperformance to healthy demand across content, network and enterprise customers as well.

The firm indicated that backlog remained consistent/steady and above it historical run rate, despite the strong install levels chipping away the backlog. Helped by accelerating cross-connect revenue growth and higher CSP power densities, ARPU was strong, given sizeable deployments in the quarter, the firm added.

A Look Ahead

On the company's development pipeline, the firm noted that the company has already pre-leased more than 50 percent of space in FR11 and FR12 in Frankfurt as well as VIE2 in Vienna. Underlining strong demand, the firm noted that company announced additional expansions last week, which would add 11,400 SQM. This, according to the firm, is more than what the company adds typically in a year.

With the company maintaining its 2017 revenue, EBITDA and capital expenditure guidance despite the strong quarterly results, Cowen termed the guidance as conservative.

"Quarterly results were solid and we believe the company is well positioned to continue to capitalize on the strong secular tailwinds in the data center sector that we anticipate should continue to drive our PT higher," Cowen said.

The firm believes a takeout might occur at some point, though it is less likely this year. The firm sees this prospect as offering support to the shares, limiting potential downside.

The firm estimates a current potential take out price of $61 per share.

Cowen also raised its revenue estimate for 2017 slightly above the consensus estimate.

As such, Cowen upgraded shares of InterXion from Market Perform to Outperform and lifted its price target from $45 to $54.

At time of writing, InterXion shares were up 1.82 percent at $49.25.