A small subsector within real estate investment trusts (REITs), data centers are lesser known than other types of REITs. A data center owns and manages data storage facilities where clients store their information safely and securely.
Data center REITs struggled in 2022 like most other REITs. Some are down 40% or more from their highs. Analysts have set a price target well above current prices as the data center REIT recently hit his 52-week low. Below are three data center REITs that analysts feel have high upside.
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Digital Bridge Group Co., Ltd. (New York Stock Exchange: DBRGMore) is a diversified REIT that owns and operates cell towers, digital infrastructure, real estate and other businesses in addition to data centers. DigitalBridge Group is based in Boca Raton, Florida and was founded in 2009.
DigitalBridge Group’s 52-week range is between $12.79 and $34.20, with recent prices just below $13. On August 23, 2022, DataBridge Group completed its previously announced Reverse 1-4 split. In mid-September, DigitalBridge Group reinstated its annual dividend of $0.01, which was discontinued in March 2020, and increased it significantly to $0.44.
Riley Securities analyst Day recently lowered his price target on DigitalBridge Group from $40 to $37 while maintaining a buy rating. The move represents a massive upside potential of 184%. But as earnings per share (EPS) have been negative for several years in a row, investors warn that this potential upside could take a long time to materialize.
Digital Realty Trust Co., Ltd. (New York Stock Exchange: DLRMore) is an Austin, Texas-based data center REIT with over 284 facilities in metropolitan areas in 23 countries.
Digital Realty Trust’s 52-week price range ranges from $96.32 to $178.22. Like most other REITs, it’s been trading near its lows recently. Digital Realty Trust pays an annual dividend of $4.88, currently yielding an annual interest rate of 5%.
Wells Fargo analyst Luebchow recently maintained his overweight rating on Digital Realty Trust, but lowered his price target from $150 to $145. Recent prices near $97 reflect optimism of a 49% gain.
Digital Realty Trust has lost almost half of its value since the end of December, but could be a winning stock once interest rates start to stabilize.
Equinix, Inc. (Nasdaq: EQIX) is a data center REIT based in Redwood City, California that calls itself the world’s digital infrastructure company.
Equinix’s 52-week price range ranges from $559.53 to $853.42. Most recently, it surpassed its 52-week low by about $2.
Last week, Barclays analyst Lynch downgraded Equinix from overweight to equalweight and lowered its price target to $674 from $822. At current levels, this equates to an increase of around 20%.
Equinix will pay a dividend of $12.40 and an annual yield of 2.2%. Like many of his REITs, it’s trending downward for the whole of 2022. Still, Equinix has increased revenue and his EPS in the last two quarters.
Barclays says the future could be much brighter for this data center REIT as metrics improve, trading almost 35% below its 52-week high and up 20% potential. .
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