Dallas, Texas-based Digital Realty Trust, Inc. (DLR) is a real estate investment trust (REIT) focused on data centers. Valued at a market cap of $55 billion, the company owns, develops, and operates data center, colocation, and interconnection facilities that support the growing demand for cloud computing, artificial intelligence, and digital transformation.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and DLR fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the REIT - specialty industry. Serving a wide range of customers, including technology companies, financial institutions, and global enterprises, DLR provides secure and scalable infrastructure solutions that enable businesses to store, manage, and exchange critical digital information worldwide.
Despite its notable strength, this specialty REIT has slipped 18.6% from its 52-week high of $198, reached on Nov. 29, 2024. Moreover, shares of DLR have declined 8.8% over the past three months, considerably lagging behind the S&P 500 Index’s ($SPX) 8.3% return during the same time frame
In the longer term, DLR has gained 8.8% over the past 52 weeks, underperforming SPX's 20.1% uptick over the same time period. Moreover, on a YTD basis, shares of DLR are down 9.1%, compared to SPX’s 10.4% surge.
To confirm its bearish trend, DLR has been trading below its 200-day moving average since early August, with slight fluctuations, and has remained below its 50-day moving average since late July.
Digital Realty Trust delivered better-than-expected Q2 results on Jul. 24, yet its shares plunged 1.2% in the following trading session. The company’s total operating revenue of $1.5 billion grew 10.1% year-over-year and topped the consensus estimates by 3.5%. Furthermore, its core FFO came in at $1.87 per share, up 13.3% from the year-ago quarter and 3.5% ahead of Wall Street's expectations. Additionally, DLR raised its fiscal 2025 guidance, now expecting revenues in the range of $5.9 billion to $6 billion, and core FFO to be between $7.15 and $7.25 per share.
DLR has outpaced its rival, Equinix, Inc. (EQIX), which declined 6.4% over the past 52 weeks and 18.8% on a YTD basis.
Despite DLR’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 29 analysts covering it, and the mean price target of $194.50 suggests a 20.7% premium to its current price levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
