Digital Realty Trust (DLR) Stock Slumps, Downgraded at Jefferies
NEW YORK (TheStreet) -- Shares of Digital Realty Trust (DLR) - Get Report are falling by 0.43% to $105.45 on Tuesday, as Jefferies downgraded the stock to 'hold' from 'buy.
The firm increased its price target on the San Francisco-based data center acquisition company to $115 from $108.
While Digital Realty Trust possesses a strong market position and solid earnings growth, Jefferies analysts noted that its earnings predictions of 10% in fiscal 2017 and 2018 fall short of its peers, which the firm predicts will see a 20% increase.
"The stock has regained its premium AFFO multiple, which is well deserved given the progress management has made over the past few years to reduce development risk and diversify into colocation," Jefferies said in an analyst note. "However, DLR's larger size makes it difficult to grow at the same pace as smaller peers."
In response to Brexit, the firm lowered interest rate predictions for the company and other REITs, which should result in higher cash flow estimates. For 2016, Jefferies increased its cash flow estimates for Digital Realty Trust to $5.67 from $5.66.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate DIGITAL REALTY TRUST INC as a Buy with a ratings score of B. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: DLR
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