Digital Realty Trust stock price target raised to $205 from $198 at Freedom Capital

Digital Realty Trust (DLR) reported mixed third-quarter 2025 results, exceeding revenue forecasts with $1.6 billion and raising full-year guidance for the third consecutive quarter, driven by robust AI-related infrastructure demand and strong pricing power, including a record 19.9% cash re-leasing spread. Despite a significant earnings per share (EPS) miss, reporting $0.15 against an anticipated $0.31, several analyst firms, including Freedom Capital Markets, JPMorgan, and Stifel, subsequently raised their price targets, citing the company's strong revenue performance, substantial $852 million backlog, and favorable market dynamics.

Analysis

Digital Realty Trust (DLR) reported mixed third-quarter 2025 results, with revenue reaching $1.6 billion, surpassing forecasts by 4.58%, while earnings per share (EPS) significantly missed expectations at $0.15 against an anticipated $0.31. Despite the EPS shortfall, the company raised its full-year guidance for the third consecutive quarter, signaling confidence in its forward outlook.

Operational performance was robust, characterized by a record 19.9% cash re-leasing spread in the greater than 1 megawatt segment, reflecting tight supply-demand dynamics. A near-record $852 million backlog provides strong revenue visibility into 2026, driven by sustained demand for AI-related infrastructure and enhanced pricing power amid constrained power availability.

Analyst sentiment remains largely positive, with Freedom Capital Markets, JPMorgan, Citizens, and Stifel all raising price targets, citing strong revenue and AI-driven demand despite the EPS miss. The consensus "Buy" rating of 1.76 and a "GOOD" InvestingPro Financial Health score underscore a generally optimistic outlook for DLR, with targets ranging from $141 to $220.

Key Decisions for Investors

• Monitor DLR's future EPS performance closely, as the significant Q3 miss could indicate cost pressures or accounting adjustments despite strong revenue.
• Evaluate the sustainability of AI-driven demand and DLR's pricing power, given the substantial backlog and record re-leasing spreads provide strong revenue visibility.
• Consider the current analyst consensus and price targets, noting the positive revisions from multiple firms despite mixed Q3 results, suggesting underlying operational strength.