RBC Capital Lifts CyrusOne PT On Growth Prospects

RBC Capital increased CyrusOne’s price target to $92 (9.8% upside potential) from $77 and reiterated a Buy rating citing the company’s valuation parameters and growth prospects.

RBC Capital analyst Jonathan Atkin wrote in a note to investors on Monday that CyrusOne (CONE) reported lower-than-expected churn rates but had solid leasing during 2Q. Atkin explained that his new price target on the stock replicates “the roll-forward impact on his DCF [discounted cash flow] model” and “less conservative” valuation factors. The analyst pointed out that the company can attract demand from large hyperscale users which would help it generate above-average growth in comparison with other datacenter REIT peers.

On July 30, the real estate investment trust reported that 2Q revenues grew 1.9% to $256.4 million year-on-year, surpassing analysts’ expectations of $253 million. The company’s funds from operations (FFO) increased by 14.4% to $1.03 per share year-over-year and beat Street estimates of $0.93.

“We had another very strong leasing quarter with broad demand across our markets in the US and Europe, and the nearly $100 million revenue backlog positions us well for growth in 2021 and beyond,” CyrusOne’s CEO Bruce Duncan said.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys and 6 Holds. The average price target of $85.92 implies upside potential of about 2.5%. (See CONE stock analysis on TipRanks).