Oppenheimer Reiterates Perform Rating on Digital Realty Trust (DLR)

Oppenheimer is out with a research report this morning, where it reiterates its Perform rating on shares of Digital Realty Trust

; it did not provide a price target for the stock. The Oppenheimer analysts said, “DLR reported mixed second-quarter results, with revenues in line with the Street but short of our forecast on lower rental revenues. FFO also came in below our/Street expectations. Leasing trends were mixed, as new commencements were well below our forecast but new signings came in ahead. Management lowered FFO/share guidance by $0.04 at the midpoint; however, the high end remains below the Street's consensus estimate. We are maintaining our '10E FFO/share and modestly reducing our 2011 estimate. DLR remains positively leveraged to ongoing migration to network centric computing, but the company's premium valuation (16x our '11E FFO/shr), versus peers keeps us neutral.” They added, “Leasing trends were mixed, with new commencements below expectations (on turnkey weakness; ~70K sq. ft. below our forecast), but new signings coming in ahead of forecast (partially on large TMRK signing in June). Positively, pricing on turnkey has been relatively stable in recent quarters. We note that leasing trends can be choppy quarter to quarter.” The analysts closed by saying, “Overall, we expect mixed 2Q results/lower guidance to weigh on the stock near term. Positively, recent acquisitions should support double-digit FFO growth trends over the next 2-3 years. Further, solid balance sheet/access to liquidity remains a competitive advantage. However, with shares trading at a premium valuation (16x our '11E FFO), we maintain our Perform rating.”