Digital Realty downgraded to Market Perform from Outperform at BMO Capital

BMO Capital analyst Ari Klein downgraded Digital Realty to Market Perform from Outperform with a price target of $100, down from $121. The analyst believes Digital Realty’s s operating fundamentals are improving, demand "remains largely healthy," and the stock’s valuation is "reasonable." However, the company’s leverage is "too high" at 7.1-times and its plans to lower leverage and fund a $3.9B development pipeline via $2B of dispositions and capital raises execution and pricing risk in a backdrop of tighter lending, high rates, and macro pressures, the analyst tells investors in a research note. Tenant bankruptcy risks are also an overhang on the shares, says BMO, who is moving to the sidelines "until visibility improves."