HSBC analyst Phani Kanumuri downgraded Digital Realty Trust (NYSE: DLR) from Buy to Hold with a price target of $210.00 (from $193.00).

The analyst comments: "We downgrade Digital Realty to Hold (from Buy) with an increased TP of USD210 (from USD 193) after a strong re-rating as we think the current valuation likely reflects its underlying strong growth momentum. Our downgrade is driven by the following reasons: Consensus looks well-priced for sustainable AFFO per share growth The company stated that they aim to deliver strong and sustainable AFFO per share growth going forward. HSBC and consensus expect 2025e-28e AFFO per share CAGR of c10%-11%. Consensus already factors in the strong AFFO per share growth and a sustained low-teens growth in AFFO per share could be required for further multiple re-rating but we see it as unlikely in our base case.

Price to AFFO per share multiple is trading at a premium compared to its average historical multiple but we see the current premium multiple as fair considering that DLR is now on path for strong AFFO growth.

For Digital Realty, our 2027-28 estimates are c2%-c6% lower on revenue, and c1%-c4% lower on AFFO per share. A key upside risk to our estimates is strong price increases above our expectations, if demand-supply imbalance becomes more pronounced, but we see this scenario as unlikely at present."

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Shares of Digital Realty Trust closed at $200.00 yesterday.