Digital Realty Trust Faces Market Challenges While Analysts Remain Optimistic
Digital Realty Trust, Inc. (DLR), based in Austin, Texas, plays a crucial role in connecting companies and data with its extensive offerings in data center, colocation, and interconnection solutions. With a market capitalization of $55.8 billion, the company boasts over 300 facilities in more than 50 cities across 25 countries, offering its PlatformDIGITAL service to tackle data management needs.
Year in Review: DLR’s Stock Performance Trails the Market
Over the past year, shares of this prominent global data center REIT have lagged behind the broader market. DLR saw a 15.5% increase, while the S&P 500 Index ($SPX) climbed nearly 20.6%. Year-to-date in 2025, DLR is down 5.2%, contrasting with the S&P’s 2.5% gain.
ETF Comparison Highlights DLR’s Underperformance
When comparing DLR’s performance with the iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT), the difference is evident. The ETF gained around 20% in the past year, and on a year-to-date basis, its 2.8% increase surpasses DLR’s losses.
Stock Decline Attributed to Market Concerns
DLR’s stock experienced a drop of approximately 10% due to worries that DeepSeek’s energy-efficient AI model could diminish the need for data centers. Additionally, fears surrounding Trump-era policies possibly driving inflation and maintaining high interest rates have contributed to its recent struggles.
Quarterly Results Reveal Mixed Outcomes
On October 24, DLR announced its Q3 results, which had a positive effect on its stock, causing it to rise over 9% in the subsequent trading session. The company’s core funds from operations (FFO) stood at $1.67, meeting Wall Street expectations. However, DLR’s revenue of $1.43 billion fell short of the anticipated $1.44 billion. The company projects its full-year core FFO to be between $6.65 and $6.75.
Future Projections Remain Cautiously Positive
For the fiscal year ending December 2024, analysts forecast a 1.8% growth in DLR’s FFO to reach $6.71 on a diluted basis. The company has had a varied record for earnings surprises: it met or exceeded estimates in three of the last four quarters but fell short once.
Analysts Show a Favorable Consensus on DLR
Among the 26 analysts covering DLR stock, the consensus rating stands at “Moderate Buy,” supported by 17 “Strong Buy” ratings, one “Moderate Buy,” seven “Holds,” and one “Strong Sell.”
Analyst Ratings Signal Potential Upside
This rating configuration is more optimistic than it was a month ago, with 15 analysts now recommending a “Strong Buy.” JMP Securities analyst Gregory J. Miller recently reasserted a “Buy” rating on DLR, setting a price target of $220, which suggests a potential increase of 30.9% from current levels.
The average price target is $189.25, indicating a 12.6% potential upside compared to DLR’s current price. Meanwhile, the highest target of $226 implies an ambitious increase of 34.5%.
On the date of publication, Neha Panjwani 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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