On Monday, RBC Capital Markets adjusted its outlook on Digital Realty Trust (NYSE:DLR), increasing the price target to $160 from $144, while keeping an Outperform rating on the stock. The firm's decision follows a review of the company's first quarter 2024 results, which included record leasing performance and favorable pricing trends.
The updated financial model takes into account the recent equity issuance by Digital Realty Trust, as well as the company's first-quarter earnings. RBC Capital's revised estimates for 2024 include revenue and adjusted EBITDA of $5.61 billion and $2.88 billion, respectively, with core funds from operations (FFO) and adjusted funds from operations (AFFO) per share at $6.68 and $6.29. These figures are slightly up from the previous estimates of $6.66 and $6.19 per share.
Looking ahead to 2025, RBC Capital projects revenue and EBITDA to reach $5.99 billion and $3.10 billion, respectively. The core FFO and AFFO per share are estimated to be $7.02 and $6.64. Capital expenditures for 2024 and 2025 are modeled at $2.55 billion and $2.52 billion, respectively.
Digital Realty Trust's management has affirmed its 2024 guidance midpoints for revenues, EBITDA, capital expenditures, and core FFO per share at $5.60 billion, $2.85 billion, $2.25 billion, and $6.675. Additionally, the company has raised its outlook for same-store net operating income (SSNOI), which has contributed to RBC Capital's increased price target.
InvestingPro Insights
Following the positive adjustment in RBC Capital Markets' outlook on Digital Realty Trust, it's pertinent to consider additional metrics that might interest investors. According to real-time data from InvestingPro, Digital Realty Trust currently boasts a market capitalization of $47.16 billion and maintains a Price/Earnings (P/E) ratio of 39.12. While the P/E ratio appears elevated, the PEG ratio, which stands at 0.18, suggests that the company's earnings growth could make it an attractive investment relative to its earnings potential over the next year.
An InvestingPro Tip highlights that Digital Realty Trust is trading at a low P/E ratio relative to near-term earnings growth, indicating potential value for investors considering the company's growth trajectory. Moreover, the company's status as a prominent player in the Specialized REITs industry, coupled with a consistent dividend distribution over the past 21 years, further cements its reputation as a stable investment.
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