While a lot of the world’s future looks digital, we will still need things like real estate that exist only in the real world. Digital Realty Trust (DLR), which handles real estate for data centers, gained fractionally in Wednesday afternoon’s trading following an upgrade from Deutsche Bank.
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Deutsche Bank, via analyst Matt Niknam, upgraded Digital Realty from Hold to Buy, and also hiked the price target from $185 to $194, according to a CNBC report. Basically, Niknam noted, momentum is now back on Digital Realty’s side, and earlier downgrades staged at Deutsche Bank were largely “premature.”
In fact, now, Niknam notes that Digital Realty is the “…preferred / most widely held name among the group.” Basically, data center demand is on the rise. As such, data centers need places to park all those computers, get power to them, keep them cooled enough to operate, and so on. And with data center demand not likely to fall back any time soon, that should mean brisk demand for Digital Realty’s stock in trade. By extension, that means brisk demand for Digital Realty as a whole.
Staying Green
While the notion of surging data center demand likely has some deeply concerned about the environmental implications, there is good news there as well. A report from Nareit took a closer look at how Digital Realty was using “green bonds” in a bid to offer up “business growth with sustainable projects.”
Digital Realty was actually the first to offer up a “green bond” for data centers all the way back in 2015. It has issued a growing amount of same ever since. Thus, we have two factors separately working in Digital Realty’s favor: a growing market for its primary stock in trade, and some protections against one of its potential key downfalls.
Is Digital Realty a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on DLR stock based on 13 Buys, four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 30.48% rally in its share price over the past year, the average DLR price target of $189.06 per share implies 7.76% upside potential.
