GDS Holdings (GDS) PT Raised to $39 with TD Cowen Expecting 'Slight Upside 4Q24 Results'

TD Cowen analyst Michael Elias raised the price target on GDS Holdings (NASDAQ: GDS) to $39.00 (from $27.00) while maintaining a Buy rating.

The analyst commented: "We are raising our PT for GDS to $39 from $27 after updating our model to reflect 3Q24 earnings. Using a 15.0x exit multiple and an 8.7% WACC, our DCF valuation implies a price target of $39 (Prior: $27).

We expect GDS to report slight upside 4Q24 results including slight upside revenue and EBITDA vs. the Street. In addition, we expect the company to provide upside initial 2025 guidance including slight upside revenue and EBITDA vs. the Street. Specific to 4Q24, we expect the company to report leasing of 17.2K SQM vs. 28.7K SQM in 3Q24 and its TTM avg. of 33.0K SQM. Specific to installs, recall from its 3Q24 earnings call that Gross Organic Tier 1 Installs for GDSH in 3Q24 was a record, reporting 25.6K SQM vs. 20.1K SQM in 2Q24 and 12.8K SQM in 3Q23. To that point, mgmt. noted that ~half of the gross organic installs were driven by AI-related demand. Lastly, mgmt. noted confidence in its expectation to achieve 2024 net installs of ~60K SQM driven by better visibility into the deployment plans of its customers, while adding that it expects the utilization rate to increase to the "high-70s" from the low-70s currently by "the end of 2025." On GDSI, mgmt. highlighted 431MW of total customer commitments and noted that the sales pipeline is "very strong"."

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