Updated Aug 17 at 11:15am ET.
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Digital Realty announced a quarterly dividend of $1.22 per share. This payment is the regular distribution the company pays to its owners out of the rent it collects from its data centers. To receive this payment, you must own the stock by the close of business on September 15. As a real estate investment trust, or REIT, the company is required by law to pay out most of its taxable income to shareholders. This dividend is a core part of why many people own the stock, though it is a routine announcement that does not change our view of the business.
Source: GlobeNewsWire
Argus Research has set a price target of $212 for the stock. This suggests the firm sees some room for the price to rise from its current level of about $195, though it is lower than the average analyst target of $218. For a data center landlord like this, analyst targets often focus on how much rent the company can collect from AI and cloud customers compared to the high cost of building new facilities. This specific target suggests a cautious but positive view on that balance.
Source: Argus Research
RBC Capital raised its price target from $207 to $227 while keeping an Outperform rating, which is their way of saying they expect the stock to do better than the broader market. This move comes just days after the company reported earnings that were higher than what analysts expected.
The higher target reflects confidence that the company can keep winning long-term leases for its data centers. As the physical home for AI software, these facilities are in high demand, and RBC appears to believe the company's massive construction pipeline will translate into higher profits for shareholders.
Source: RBC Capital
TD Cowen upgraded the stock to a Buy rating immediately after the company's latest financial report. This is a significant shift in stance, suggesting the firm now has higher conviction in the company's ability to grow its earnings.
The upgrade likely stems from the company's ability to raise its full-year profit forecast. In a market where building data centers is becoming more expensive, this analyst move signals that the company's scale and existing power capacity are providing a competitive edge that justifies a more optimistic view.
The company reported second-quarter earnings of $1.21 per share, which was more than double the $0.48 that analysts expected. Revenue also came in strong at $1.92 billion, beating the $1.66 billion forecast. Because of this performance, management raised its full-year forecast for funds from operations, a key measure of cash profit for real estate companies.
The stock rose about 3 percent after the news. The results show that the surge in artificial intelligence is creating a massive need for the physical data centers this company owns. While it is spending heavily to build more capacity, the fact that it can raise its profit outlook suggests it is successfully passing those costs on to customers who are eager to secure space for their AI chips.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts have been upgrading the stock and raising their price targets throughout the summer following strong second-quarter results. Most analysts rate it a buy, and the average target of $220 suggests the price could rise another 11%.
The company has a habit of clearing the bars set for it, often beating profit forecasts by a wide margin as it captures more of the global shift to the cloud.
| Expectation | |
|---|---|
| EPS | $0.52 |
| Revenue | $1.74B |
GlobeNewsWire · Press release · Aug 11
Seeking Alpha · Opinion · Jul 29
Seeking Alpha · Opinion · Jul 28
Reuters · Jul 23
GlobeNewsWire · Press release · Jul 23
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