HSBC starts Digital Realty with Reduce on high leverage

HSBC initiated coverage of Digital Realty (DLR) with a Reduce rating and $112 price target. The analyst prefers Equinix (EQIX) among the global data centers for its “balance sheet strength, diversified revenue and strong execution.” Digital Realty has high leverage in the current interest rate environment, is exposed to execution and valuation risks with its asset monetization program and is investing in new data centers which could hurt adjusted funds from operations more than market expectations, the analyst tells investors in a research note.