On Friday, Truist Securities updated its outlook on Equinix (NASDAQ:EQIX), increasing the price target to $1,090 from $935 while maintaining a Buy rating on the stock. Currently trading at $979.1, the company's shares have delivered an impressive 24% return year-to-date and are approaching their 52-week high of $994.03.
According to InvestingPro analysis, the stock appears overvalued at current levels. The revision follows Equinix's third-quarter earnings for 2024, which prompted the analyst to adjust the company's EBITDA and AFFO projections for the coming years.
The analyst's updated estimates now set the 2024 expected EBITDA at $4,115 million, a significant increase from the current EBITDA of $3.1 billion, aligning with the company's guidance range of $4,086-$4,126 million.
InvestingPro data shows the company maintains a "Good" Financial Health Score of 2.93, supported by strong cash flow metrics. Adjustments were also made to the anticipated adjusted funds from operations (AFFO) per share, which are now projected to be $35.22 for 2024, up from $35.12, and $37.88 for 2025, up from $37.59.
The revised EBITDA estimates suggest a year-over-year growth of 11.2% in 2024, with an 11.7% increase expected in 2025. The analyst foresees an average growth rate of 11% through 2029. The assumptions underlying these projections for 2025 include the addition of 10,000 new cabinet billings, a 5% rise in average monthly colocation revenue per installed cabinet, 29,000 interconnection adds, and a 3% increase in interconnection monthly pricing.
The new 12-month price target of $1,090 is based on a blended valuation approach. This includes a $1,157 estimate from discounted cash flow analysis, which carries a one-third weighting, a 15% premium on the projected net asset value (NAV) a year from now, and a multiple of 22 times the next twelve months' (NTM) EBITDA. Each of these components contributes equally to the final price target calculation.
In other recent news, Equinix, the global data center real estate investment trust, continues to make significant strides. CFRA, a well-known financial research firm, recently raised Equinix's price target to $975, citing the company's strong position in the data center REIT market and its potential benefits from AI advancements. This update comes along with CFRA's maintained Hold rating on the stock and an increase in the 2025 funds from operations (FFO) estimate to $27.00. Revenue expectations stand at $8.8 billion for 2024 and $9.5 billion for 2025.
Equinix recently reported a 7% year-over-year increase in revenue to $2.2 billion and a 12% rise in adjusted EBITDA in its third-quarter earnings call. This marks the 87th consecutive quarter of revenue growth for the company. Other recent developments include the issuance of €1.15 billion in senior notes, set to finance or refinance green projects, and a strategic partnership with CPP Investment Board and GIC to invest over $15 billion in xScale facilities.
These recent developments underscore Equinix's commitment to growth and innovation in the data center and interconnection space. The company's continued revenue growth and strategic investments demonstrate its leadership in the industry. Equinix's ongoing site expansions and unique cloud-based global platform position it as a preferred partner for many leading technology companies.
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