EQIX - Data centers cell tower REITs face growth headwinds Wolfe Research says

On their size alone, data centers and cell tower REITs face a potential long-term headwind, said Wolfe Research analyst Andrew Rosivach, who assumes coverage of the sector with a Market Underweight rating. "Tech REITs are a large, mature sector which moderates external growth potential," he writes in a note to clients. On a cyclical basis, he sees traditional commercial real estate REITs benefiting from a COVID-induced supply-demand imbalance in favor of landlords. Meanwhile, "certain factors will muddy near-term tech REIT growth, Rosivach said. On a secular basis, both data center and cell tower REITs have impressive moats and will outperform relative to traditional REITs, he said. Long-term demand driver for both are "outstanding," but cost issues, specifically for Equinix (NASDAQ:EQIX), along with Sprint churn for cell towers "will keep near-term growth below long-term potential." He has no Outperform ratings on individual tech REIT names. He sees highest total returns on Digital

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Data centers, cell tower REITs face growth headwinds, Wolfe Research says