Credit Suisse Cuts Digital Realty Trust's Price Target By 33% Citing Several Challenges

Credit Suisse analyst Sami Badri reiterated a Neutral rating on the shares of Digital Realty Trust Inc DLR and lowered the price target to $98 from $146.
The analyst updated the model to reflect FX and rising interest rates.
The analyst reduced 2022 estimates primarily on FX movements and an increase to DLR’s interest expense for the year.
He lowered the price target on decreased AFFOS (Adjusted Funds From Operations) in 2023 and a lower AFFOS valuation multiple.
Badri thinks facility space development time has been a challenge and has already elongated for the company. This challenge is only worsened by market-specific constraints, such as power supply in Northern Virginia.
Investors will be watching Digital Realty’s renewal metrics and new leasing rates as a key indicator of pricing power, which Badri believes will be mostly healthy.
While the analyst expects demand to moderate from all-time highs in 1H FY22, the channel checks indicate continued robust activity from hyperscalers.
The analyst remains reserved on supply chain, weighing inflation pressures and fundamentals.
Also Read: REITS Slightly Under Performing Year-To-Date Compared To S&P 500
Price Action: DLR shares are trading lower by 4.62% at $94.43 on the last check Thursday.

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