Deutsche Bank cuts DigitalBridge target to $16, maintains Buy
On Thursday, Deutsche Bank adjusted its outlook for DigitalBridge Group Inc. (NYSE:DBRG), reducing the price target to $16 from the previous $17 while still recommending a Buy rating for the stock. The decision follows the company’s second-quarter 2024 results and details from its recent 10-Q filing.
The bank’s analyst cited a positive stance on DigitalBridge’s shares, seeing the company as a less recognized player with significant potential in the AI space, likely to gain from increased investment in Data Centers, Fiber, and Towers over the coming decade. The analyst highlighted the company’s alignment with industry trends in AI, Cloud, and 5G themes, which are also pursued by peers.
Despite the optimism, the bank acknowledged the current lukewarm sentiment towards DigitalBridge’s shares, which may be attributed to the necessary second-half performance to meet capital raising and Fee-Related Earnings (FRE) targets for the year.
This sentiment is also influenced by DigitalBridge’s recent shift from a capital-heavy Real Estate Investment Trust (REIT) to a more streamlined alternative investment approach, which might require a more consistent execution track record to significantly re-rate the shares.
The analyst believes that if DigitalBridge can demonstrate the ability to consistently meet investor expectations, there could be a meaningful reassessment of the stock’s value. The revised $16 price target suggests an upside potential of over 30% from the current trading levels.
In other recent news, DigitalBridge Group Inc. reported robust Q2 2024 financial results, with an 18% increase in management fee revenues year-over-year. The company’s AI-focused strategy has resulted in significant capital formation, with $14 billion raised this year, 80% of which is allocated for data center investments. DigitalBridge also plans to raise $7 billion in new capital by the end of the year.
TD Cowen reaffirmed its Buy rating on DigitalBridge shares, maintaining a steady price target of $19. This follows the 10th Annual TD Cowen Communications Infrastructure Summit, where DigitalBridge’s CEO Marc Ganzi provided insights on topics such as the potential of Generative AI and the dynamics of power transmission.
The company’s global data center portfolio is set to expand from 4 gigawatts to 7.5 gigawatts over the next five years, aiming to meet the growing demand for AI infrastructure. DigitalBridge is confident in achieving $150 million in fee-related earnings for the full year and sees a $30 billion growth opportunity in AI data center infrastructure.
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