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Digital Realty Q2 Earnings Better-Than-Expected; Revenues Meet Estimates
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Digital Realty Q2 Earnings Better-Than-Expected; Revenues Meet Estimates

Real estate investment trust Digital Realty (DLR) has reported better-than-expected Q2 earnings on decent signed total bookings and robust revenue growth.

The company reported earnings of $0.45 per share, which more than doubled on a year-over-year basis, beating the Street’s estimate of $0.23 per share.

Revenue climbed 10% to $1.1 billion, and was in line with the analysts’ estimates. Growth in interconnection & other, along with rental revenues, was partly offset by a fall in other tenant reimbursements and fee income.

In Q2, signed total bookings are expected to generate $113 million of rental revenue, including a $13 million contribution from interconnection. The weighted-average lag between leases signed during the quarter and the contractual commencement date was seven months. (See Digital Realty stock charts on TipRanks)

The CEO of Digital Realty, A. William Stein, said, “Bookings in the quarter reflect the continued adoption of PlatformDIGITAL with strong new logo growth and balanced product sales. By investing to support our customers’ growth around the world, we are widening our competitive moat which results in sustainable growth for our shareholders.” 

The company has revised its core funds from operations (FFO) per share outlook from $6.50-$6.55 to $6.45-$6.50, which includes a $0.12 non-cash charge related to the higher corporate tax rate in the UK.

Following the results, BMO Capital analyst Ari Klein reiterated a Buy rating on the stock with a price target of $175 (upside potential 16.3%).

The analyst is of the opinion that Digital Realty’s underlying fundamentals are improving amid healthy demand. He sees FFO growth accelerating in 2022.

Consensus among analysts is a Strong Buy based on 4 Buys and 1 Hold. The average Digital Realty price target stands at $165.80, implying upside potential of 10.2%.

TipRanks data shows that financial blogger opinions are 93% Bullish on DLR, compared to the sector average of 70%.

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