Digital Realty’s Q2 Was Unspectacular, and Currency Headwinds That Hampered it Will Persist

Digital Realty had a decent second quarter that was dampened by the strong U.S. dollar. Bookings were solid but unspectacular. Pricing power was apparent after a long stretch of underwhelming renewal pricing. Currency headwinds prompted a slight reduction in the firm’s full-year outlook, but we think it remains well-positioned long-term. It is one of only two firms, along with Equinix, that can provide a worldwide data center presence with robust connectivity options, and we expect secular trends toward digitization and connectivity will keep those qualities in demand. With nothing in the quarter leading us to alter our forecast, we are maintaining our $133 fair value estimate.