Market Overview

Raymond James Downgrades Digital Realty Trust On Valuation, Says Demand Remains Strong

Raymond James Downgrades Digital Realty Trust On Valuation, Says Demand Remains Strong

Digital Realty Trust’s (NYSE: DLR) stock is trading at 18 percent above the NAV, while real estate-oriented data center stocks typically trade between a value that is equal to their NAV to about 20 percent higher, according to Raymond James.

The Analyst

Raymond James’ Frank Louthan downgraded Digital Realty Trust from Outperform to Market Perform. 

The Thesis

The demand for data center services remains robust in the U.S., Louthan said in the Monday downgrade note.

Any growth in demand in Europe or other markets could lend upside to Digital Realty Trust’s stock, which is already trading close to the previously set price target of $120, the analyst said. 

Excluding Facebook, Inc.(NASDAQ: FB), Digital Realty Trust’s overall bookings are expected to exceed 2018 levels by the end of 2019, Louthan said. Although the Northern Virginia market remains challenging, overall data center demand could continue at elevated levels, he said. 

The stock has already outperformed the group, and there are “better opportunities to invest in other names over the next 12 months," the analyst said. 

Price Action

Digital Realty Trust shares were down 0.54 percent at $118.64 at the time of publication Monday. 

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