Digital Realty downgraded to Sector Perform at Scotiabank after outperformance

As previously reported, Scotiabank analyst Maher Yaghi downgraded Digital Realty to Sector Perform from Outperform with an unchanged price target of $157. While guidance on FFO was better than the firm’s estimate, it came in lower than consensus as 2024 FFOPS growth is expected to be dampened by the company’s aggressive asset sales in 2023 and early 2024, the analsyt tells investors. Scotia expects core FFOPS to grow by only 1% in 2024 due to asset sales, but accelerate to 10% in 2025 as it laps the major disposition cycle and new developments come online. However, due to the stock’s strong performance and the diminished upside to its unchanged target price, the firm is downgrading the shares and now sees less upside in the stock over the short term.