Demand for carrier-neutral colocation remains strong across the board, in an environment in which the entire segment posted quarterly earnings pointing toward healthy fundamentals, says Todd C. Weller, Managing Director at Stifel, Nicolaus & Co., Inc.
“A lot of the drivers for the carrier-neutral segment have been secular growth of the Internet, everything from cloud computing to Internet gaming to software as a service. That’s fueling demand for carrier-neutral data centers. So we’ve seen solid demand in that segment,” Weller said.
Weller points to Equinix (EQIX) as his top name in the space. He says EQIX is the only global provider of carrier-neutral colocation services, and the company reported strong bookings in all of its geographies. He also says that although valuation decreased recently, there is still room for upside.
“The last few weeks have been devastating to Equinix‘s share prices, as well as any other stock on my screen because they reported very solid results as I mentioned, and you saw the stock up to $105, and now we’re sitting here in the low $80s,” Weller said. “We think that the estimates are conservative for the back half, and there’s room for upside there.”
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