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Why Wall Street Loves Data Center REITs—Including Equinix

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Analysts’ view

Equinix’s (EQIX) impressive back-to-back quarterly performances, an encouraging outlook for 2018, and a healthy demand environment for data center services have instilled confidence among analysts. This confidence is easily visible in their ratings on the stock.

Over the last four months, analysts have maintained their “buy” recommendations on Equinix. On July 31, eight of the 24 analysts gave a “strong buy” rating, 14 gave “buy” ratings, and the remaining two have a “hold” stance on the stock. About 92.0% of the analysts were bullish on the stock, and the remaining 8.0% have a neutral position. 

Wall Street’s target price of $499.75 represents an upside of 12.8% from the current market price of $443.20. In 2017, the stock gained ~29.0%.

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Peers’ ratings

Analysts are bullish for the entire data center REITs industry and have provided “buy” recommendations to Equinix’s peers Digital Realty (DLR), CyrusOne (CONE), CoreSite Realty (COR), and QTS Realty (QTS).

For Digital Realty, five of the 20 analysts provided a “strong buy” opinion, seven gave a “buy” rating, and the remaining eight have a “hold” stance. The target price of $125.58 represents a 3.7% increase from the current price of $121.11.

Four of the 18 analysts provided a “strong buy,” seven provided a “buy,” and the remaining seven have “hold” recommendations on CoreSite Realty. Analysts’ target price of $118 represents a 2.6% increase from the current price of $115.04.

For CyrusOne, seven of the 19 analysts provided a “strong buy” recommendation, ten have a “buy” stance, and the remaining two gave “hold” ratings. With a target price of $65.44, Wall Street forecast a 3.4% rise from the current market price of $63.31.

QTS Realty received “strong buy” recommendations from three of 16 analysts. Six gave a “buy” rating, and five gave “hold” recommendations. The stock received a “sell” rating from two analysts. The target price of $44.40 depicts Wall Street’s forecast of a 2.4% increase from the current market price of $43.37.

Equinix comprises ~4.6% of the First Trust Cloud Computing ETF (SKYY).

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