Digital Realty Trust: Navigating a Challenging Market Landscape

With a market cap of $49.5 billion, Digital Realty Trust, Inc. (DLR) operates as a real estate investment trust (REIT). Headquartered in Austin, Texas, the company specializes in the ownership, acquisition, development, and operation of data centers. It offers a comprehensive range of data center, colocation, and interconnection solutions across more than 25 countries and six continents.

Company Overview

Classified as a “large-cap” stock, companies with valuations of $10 billion or more fit this category, and Digital Realty is no exception. Through its global platform, Platform DIGITAL, DLR provides customers with a secure environment for data management. The company employs a proven Pervasive center architecture (PDx) methodology aimed at fostering innovation and tackling Data Gravity issues effectively.

Stock Performance and Market Comparison

Over the past year, Digital Realty’s stock retreated 25.7% from its 52-week peak of $198.00. In the last three months, DLR shares decreased by 21.5%, significantly underperforming the Real Estate Select Sector SPDR Fund (XLRE), which only fell by 3.3% during the same timeframe.

On a year-to-date basis, DLR’s performance shows a decline of 17.1%, in stark contrast to XLRE’s modest gain of 2.3%. While Digital Realty shares have increased by over 1% in the last 52 weeks, XLRE has yielded a return of 4.1%.

Technical Indicators

DLR has traded above its 50-day and 200-day moving averages since last year. However, it has dipped below its 50-day moving average as of mid-December 2024 and fell below its 200-day moving average in late February.

Recent Earnings Report

Digital Realty surpassed Q4 2024 earnings estimates, reporting a core FFO of $1.73 per share on February 13. Yet, the company did not meet revenue forecasts of $1.4 billion. Despite missing the revenue mark, DLR saw positive contributions from its leasing and interconnection activities. Looking ahead, it expects core FFO per share to range between $7.05 and $7.15.

Competitive Landscape

When comparing DLR with its peer Equinix, Inc. (EQIX), it appears that EQIX has encountered a greater decline of 6.4% over the past year, yet it has a year-to-date drop of 11.3%, still outperforming DLR.

Analyst Outlook

Despite Digital Realty’s recent struggles in the market compared to its sector, analysts maintain a moderately optimistic view on its prospects. The stock currently holds a consensus rating of “Moderate Buy” from 27 analysts. As of the latest data, DLR is trading below the average price target of $187.50.

On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

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