W ith its shares holding up better than many peers,Digital Realty Trust ( DLR ) is looking to its future following a major acquisition. In July, the company agreed to acquire Telx, a provider of 1.3 million square feet of data-center space, the server farms that have become key for Big Data computing.
The deal, valued at $1.89 billion, roughly doubled Digital Realty's footprint in the data center co-location service market.
Digital Realty Trust, a real estate investment trust that specializes in co-location services, now can look to its next goals.
"With the 3Q report, the first following the close of the Telx transaction ...we are not overly surprised to see (the company's) guidance moving higher on lower development capital expenditures based on the space that has been made available via acquiring Telx," analysts at Cannacord Genuity noted in a report following Digital's earnings Oct. 29.
"Even so, it would appear that the company continues to make progress in absorbing excess capacity to the point where it is now talking about expansion of its footprint in the markets they operate in -- subject to the requirement that it be accretive to shareholders."
Canaccord also saw the possibility of acquisitions abroad, specifically in Europe.
Digital Realty already has operations in North America, Europe, Asia and Australia.
Q3 rental revenue was better than expected, partly due to higher occupancy and rental rates, Canaccord's analysts said.
In November, Digital Realty acquired a 126-acre parcel in Loudoun County, Va., where it will help expand the company's data center campus in nearby Ashburn. Digital Realty paid $43 million for the land.
Digital Realty pays a quarterly dividend of 85 cents a share, which works out to an annualized yield of nearly 5%.
The stock is forming a cup-with-handle base with a potential buy point at 75.30. The RS Rating is decent despite the long base.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.