Digital infrastructure company Equinix, Inc. (NASDAQ: EQIX) recently revealed that it acquired four data centers from Chilean telecommunications provider Empresa Nacional De Telecomunicaciones S.A., also known as Entel, for $705 million to enhance its presence in the Latin American regions of Chile and Peru. The deal is likely to close in the second quarter of 2022.
Following the news, shares of the company gained 1.7% to close at $732.26 in Friday’s trading session.
Strategic Impact
With enterprise edge spending in Latin America to reach $8.573 billion by 2024, according to IDC, the region represents a strong growth market for Equinix, especially Chile, which remains the country with the highest GDP per capita in the region.
Notably, the acquisition of these four data centers is likely to position Equinix as a leading player in the digital infrastructure space in the region and also leave significant scope for future expansion.
Further, Equinix expects the acquisition of the four data centers, which generates roughly $53 million of annualized revenue, to be immediately accretive to Equinix’s adjusted funds from operations (AFFO) per share upon closure of the deal. With three data centers in Chile, the deal may also include one data center in Peru pending finalization of a definitive agreement.
Management Commentary
CEO of Equinix, Charles Meyers, said: “Latin America holds enormous potential, and our commitment to the region has exponentially grown since we entered back in 2011.
“Chilean, Peruvian, and multinational companies are thirsting for the digital infrastructure required to thrive in today’s economy; with today’s expansion, we’re broadening digital access and accelerating digital transformation across Latin America while supporting growth in a responsible and sustainable manner.”
Wall Street’s Take
Two days ago, Citigroup analyst Michael Rollins initiated coverage on the stock with a Buy rating and a price target of $950, which implies upside potential of 29.7% from current levels.
According to the analyst, Equinix remains well poised to grow its revenue and AFFO per share due to its xScale strategy and new digital infrastructure services. Notably, the analyst remarks that the xScale strategy to enhance the value of its campus is expected to be particularly beneficial to the company.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 13 Buys, three Holds, and one Sell. The average Equinix stock prediction of $818.24 implies the stock has upside potential of 11.7% from current levels. Shares have gained over 12% in the past year.
Positive News Sentiment
News sentiment for EQIX is Positive, based on 10 articles over the past seven days. 100% of the articles have Bullish sentiment, compared to a sector average of 62%.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
Related News:
Dollar General Shares Soar 4.5% on Dividend Hike & Upbeat Outlook
Targa Resources Agrees to Acquire Southcross Energy for $200M
FedEx Q3 Earnings Disappoint; Shares Dip
