Citi Predicts Upside for Digital Realty with $200 Price Target

Citi has upgraded Digital Realty (DLR) to a "Buy" rating with a $200 price target, citing a better bookings outlook for the latter half of 2025. The company's financial health is mixed, with a net margin of 23.98%, operating margin of 14.59%, and EBITDA margin of 63.84%. However, the Altman Z-Score of 1.71 suggests potential financial instability. The company's revenue has grown at a 2.8% annual rate over the past five years, and its gross margin has been declining.

Citi has upgraded Digital Realty Trust (DLR) to a "Buy" rating with a $200 price target, citing a better bookings outlook for the latter half of 2025. The company's financial health is mixed, with a net margin of 23.98%, operating margin of 14.59%, and EBITDA margin of 63.84%. However, the Altman Z-Score of 1.71 suggests potential financial instability. The company's revenue has grown at a 2.8% annual rate over the past five years, and its gross margin has been declining [1].

The upgrade comes as Digital Realty Trust reported earnings results on July 24, 2025, with earnings per share (EPS) of $1.87, beating analysts' consensus estimates of $1.74 by $0.13. The company's revenue for the quarter was $1.49 billion, up 10.0% compared to the same quarter last year. The company's return on equity (ROE) was 6.46%, and its net margin was 23.98%. Despite the strong earnings, the company's financial ratios suggest a mixed picture, with a declining gross margin and a low Altman Z-Score.

The upgrade by Citi follows a series of analyst ratings and price targets. New Street Research raised DLR to a "hold" rating, while Mizuho lifted their price objective to $191.00 with an "outperform" rating. Barclays lifted their price objective to $141.00 with an "underweight" rating. Truist Financial set a $199.00 price objective with a "buy" rating, and Jefferies Financial Group reissued a "buy" rating with a $193.00 price objective. Two analysts have rated the stock with a "Strong Buy" rating, fifteen have assigned a "Buy" rating, five have issued a "Hold" rating, and one has assigned a "Sell" rating to the company's stock. The stock has a consensus rating of "Moderate Buy" and an average target price of $190.74 [1].

However, the company faces bearish technical signals and mixed fundamentals, urging investor caution. A lawsuit claims misleading proxy materials harmed Broadmark Realty's post-merger performance, while Singapore REITs shift toward cash-based yields and sustainability. Negative fund flows across all investor categories and repeated bearish technical patterns reinforce risks of further decline [2].

Despite these mixed signals, Citi's upgrade suggests that the company's bookings outlook for the latter half of 2025 could provide a catalyst for growth. Investors should closely monitor the company's financial performance and the broader market trends to make informed decisions.

References:

[1] https://www.marketbeat.com/instant-alerts/filing-cbre-investment-management-listed-real-assets-llc-acquires-773393-shares-of-digital-realty-trust-inc-dlr-2025-08-23/

[2] https://www.ainvest.com/news/stock-analysis-digital-realty-trust-outlook-cautionary-note-mixed-market-signals-2508/