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Switch Stock Jumps as Data-Center Firm May Convert to REIT

Data-center developer Switch said it might convert to a REIT. It's bringing an Elliott executive to its board and its quarterly revenue beat estimates.
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Switch  (SWCH) - Get Switch, Inc. Class A Report shares jumped on Friday after the data-center developer said it might turn into a REIT, named an Elliott Investment Management executive to its board, and reported that second-quarter revenue beat estimates.

Investors and Wall Street analysts reacted positively to the news. Switch shares recently traded at $24.93, up 23%. The stock gained 7% in the six months through Thursday.

Jason Genrich of the New York activist investor Elliott will join the board of the Las Vegas company.

Raymond James boosted its rating on the stock to strong buy from outperform and lifted its price target to $25 from $20.

A switch by Switch to real estate investment trust status could come by January 2023, Raymond James analysts said, according to Bloomberg.

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A conversion “will drive significant value, as the lack of REIT status explains some of the multiple disparity” in the stock, they said.

The Elliott board addition offers “comfort that the company is getting solid shareholder advice from investors who have a strong track record of unlocking value.”

Cowen boosted its rating to outperform from market perform and its target price to $26 from $20.

The REIT and Elliott moves indicate “an inflection point, which should help close the valuation gap with peers, which has persisted despite strong execution of late,” the analysts said, according to Bloomberg.

Truist analysts raised their price target to $30 from $24, affirming a buy rating.

Elliott’s "known activism, now a seat on the board combined with the company’s valuation, represent opportunities for further shareholder value creation, either through potential acquisition or through improved execution,” they said, according to Bloomberg.