On Monday, Mizuho reaffirmed its Outperform rating on Digital Realty Trust (NYSE:DLR), with a steady price target of $170.00. The endorsement follows Digital Realty's financial performance, which surpassed market expectations with Funds From Operations (FFO) of $1.67, edging out the consensus estimate of $1.66 and aligning with Mizuho's forecast.
The company's success was attributed to strong core metrics, including improved occupancy and rent spreads. A highlight of the report was Digital Realty's announcement of record bookings worth $521 million, a figure that more than doubles their previous record. Renewal rates for the segment exceeding 1 megawatt also showed strength at 31.4%, indicating significant pricing power.
In response to these positive outcomes, Digital Realty has raised its guidance midpoint by $0.025, now projecting $6.70, which is slightly above the Street's expectation of $6.66. This adjustment reflects the company's continued growth and operational efficiency.
Looking ahead, Mizuho sees several factors that reinforce their positive stance on Digital Realty. These include favorable comparisons between current signed rents per kilowatt and expiring rents, a backlog that enhances growth trajectory visibility, and a provided slide that outlines a potential path to high single-digit FFO growth into the 2026 fiscal year. The firm's reiterated Outperform rating underscores confidence in Digital Realty's strategic direction and market position.
In other recent news, Digital Realty Trust has been a topic of discussion following a series of promising developments. The company's Q3 2024 performance was record-breaking, with new leasing volume hitting an all-time high of $521 million. This robust performance was further underscored by the backlog of leases set to commence, which increased to nearly $860 million, indicating strong demand for data center capacity.
In addition, RBC Capital Markets has raised its target for Digital Realty Trust to $207, following the company's strong results. Analysts at RBC have cited the company's record backlog and advantageous lease escalators as key factors in their decision.
Digital Realty Trust's management has also released updated guidance for 2024, projecting midpoints for revenues at $5.58 billion, EBITDA at $2.95 billion, capital expenditures at $2.30 billion, and core FFO per share at $6.70.
InvestingPro Insights
Digital Realty Trust's strong performance and positive outlook, as highlighted in Mizuho's report, are further supported by recent data from InvestingPro. The company's market capitalization stands at an impressive $59.98 billion, reflecting its significant presence in the Specialized REITs industry.
InvestingPro Tips indicate that Digital Realty has maintained dividend payments for 21 consecutive years, underlining its commitment to shareholder returns. This aligns well with the company's raised guidance and strong financial performance mentioned in the article. Additionally, the stock has shown a strong return over the last three months, with InvestingPro data revealing a 25.23% price total return in that period.
The company's revenue for the last twelve months as of Q2 2024 was $5.35 billion, with a revenue growth of 4.76% over the same period. This growth, coupled with the record bookings of $521 million mentioned in the article, suggests Digital Realty is on a solid growth trajectory.
It's worth noting that InvestingPro offers 16 additional tips for Digital Realty Trust, providing investors with a comprehensive analysis of the company's financial health and market position.
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