Morgan Stanley Downgrades GDS Holdings (GDS) to Equalweight
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Morgan Stanley analyst Yang Liu downgraded GDS Holdings (NASDAQ: GDS) from Overweight to Equalweight with a price target of $80.00 (from $90.00).
The analyst comments "Although losing a 3K cabinets quota does not sound notable for GDS given its annual addition of 40K (or ~100K sqm), we are concerned that: 1) emergingnew players like GLP and Hotwon received quotas;2) allocation remains fragmented;3)hyperscale customer AliCloud recieved its quota directly. This could be a one-off, but we see higher uncertainty in the government's future preference. We are concerned about whether GDS' industry-leading scale, operational excellence, track record and green initiatives can translate into sustainable advantages in acquiring scarce resources in front of regulators. Small players/new entrants are gaining momentum,escalating the competitive risk. Customers directly applying power quotas in tier one markets looks like an unusual practice, bringing incremental concerns on higher in-house percentage."
Shares of GDS Holdings closed at $72.47 yesterday.
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