UPDATE: J.P. Morgan Upgrades 21Vianet Group to Overweight, Raises PT on Good Upside Potential Over Coming Year

In a report published Wednesday, J.P. Morgan analyst Lucy Liu upgraded the rating on

from Neutral to Overweight, and raised the price target from $11.00 to $25.00. In the report, J.P. Morgan noted, “Despite the vast share price increase since this June, we believe it is NOT too late to upgrade the stock as we see more than 30% upside potential over the coming year driven by: 1) stronger data center demand in China to translate into quicker cabinets sale-through with rising prices; 2) the mix of the cabinets portfolio to significantly shift to self-built ones in Beijing in the next 15 months, which will underpin a stronger margin trend; and 3) despite a slight delay in the commercial launch of cloud services with Microsoft in order to set a right start, we forecast the cloud revenue to grow by 230% CAGR in 2013-15. Our revenue, EBITDA and net profit forecasts are 8-15%, 15-22% and 29-38% ahead of consensus in 2014/2015. We believe the recent price correction has largely priced in the delay of cloud service launch, and we would view any dip as a good buying opportunity to access the multi-year structural trend.” 21Vianet Group closed on Tuesday at $18.42.