Digital Realty Earnings: Great Pricing and Good Demand With Trend Toward Interconnection Deployments

Digital Realty had a solid though unspectacular quarter of new bookings across all customer types and geographies, which we expect to be typical given we see no end in sight to the growing reliance all entities have on data and connectivity. The most impressive figure this quarter was the significant pricing growth on renewal leases, and management expects the re-leasing spreads to stay elevated throughout the year, which will bode well for sales growth beyond 2023. With little surprising in the quarter, we are maintaining our $135 fair value estimate and still think the stock is mildly undervalued.