Infrastructure

SunTrust Raises Price Targets on Red-Hot Data Center Stocks

Equinix

This is one of the larger cap companies in the data center arena, and a top play for more conservative accounts. Equinix Inc. (NASDAQ: EQIX) provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa and the Asia-Pacific.

The company provides colocation services and related offerings, including operations space, storage space, cabinets and power for customers colocation needs; interconnection services, comprising physical cross connect/direct interconnections, Equinix Internet Exchange, Equinix Cloud Exchange, Equinix Metro Connect and Internet connectivity services; and managed IT infrastructure services, including installation of customer equipment and cabling, as well as equipment rebooting and power cycling, card swapping and emergency equipment replacement services.

Investors are paid a 1.73% distribution. SunTrust raised its $500 target price to a stunning $530, while the consensus price objective is $500.25. The stock last traded at $462.82 a share.

QTS Realty Trust

This is another top pick data center REIT that could be a target. QTS Realty Trust Inc. (NYSE: QTS) is a leading provider of secure, compliant data center solutions, hybrid cloud and fully managed services. Its integrated technology service platform of custom data center, colocation and cloud and managed services provides flexible, scalable, secure IT solutions for web and IT applications.

The company’s Critical Facilities Management (CFM) provides increased efficiency and greater performance for third-party data center owners and operators. QTS owns, operates or manages 24 data centers and supports more than 1,000 customers in North America, Europe and Asia-Pacific.

QTS investors are paid a 2.91% distribution. The $60 SunTrust price target was raised to $62. The consensus target is $58.36, and shares closed Friday at $53.68.

Interxion

This company doesn’t pay a distribution but is a top play for investors looking for European exposure. Interxion Holding N.V. (NYSE: INXN) builds and operates 39 carrier-neutral data centers in 11 countries across Europe, spanning nearly 100,000 square meters. The company services approximately 1,500 customers, consisting of network providers, managed service providers, financial services companies, digital media and distribution companies, and enterprises.

With over 600 connectivity providers, 21 European internet exchanges, and most leading cloud and digital media platforms across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest.

The SunTrust price objective was raised to $57 from $55. The consensus price target is $56.28, and shares ended trading on Friday at $52.12.

All these, with the exception of the last one, are very solid total return plays in an industry that sees no signs of slowing down. In addition, all have backed up some from highs printed earlier this year and are offering better entry points.