EQIX - Equinix stock dips after Oppenheimer cuts to Perform on valuation guidance
2023-06-22 08:36:42 ET
Equinix ( NASDAQ: EQIX ) stock fell as much as 2.2% in Thursday premarket trading after Oppenheimer analyst Timothy Horan downgraded the data center REIT to Perform from Outperform as the stock traded at a record valuation amid slowing growth.
At its analyst day Wednesday, the company guided for 8%-10% per year revenue growth to around $12B by 2027, Horan pointed out, which "would normally be viewed as stellar in isolation, but low vs. 1Q23's +16% CC and '23E's 14–15% CC, admittedly boosted by energy pass-throughs."
At the same time, management said operating and capital expenses would stay high, and "it's still too early to forecast" whether artificial intelligence would mark a new growth inflection point.
On the valuation front, "the stock feels fully-valued," Horan said, trading at 20.7 times 2024 estimated FV/EBITDA. "Growth is solid but slowing, and investors will want greater certainty around AI and digital services opportunities," he added.
SA's Quant system gave EQIX a Valuation Grade of "F," with the poorest marks in enterprise value-to-EBITDA, dividend yield and price-to-FFO.
On May 3, shares of Equinix ( EQIX ) jumped over 10% after it posted Q1 earnings that exceeded the Wall Street consensus and increased its 2023 guidance. From a year ago, the stock climbed 20%.
Horan's Perform rate aligns with the Quant rating of Hold and diverges from the average sell-side analyst rating of Buy.
More on Equinix and its growth prospects
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Equinix expands its digital infrastructure footing in Kuala Lumpur, Malaysia
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Equinix: A Solid REIT With The Longest Growth Streak In The S&P 500
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Equinix stock dips after Oppenheimer cuts to Perform on valuation, guidance