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Highlights
- E&P Capital initiates coverage on DigiCo Infrastructure REIT (ASX:DGI) with a 'positive' outlook.
- Price target set at $5.13, nearly 20% higher than the last closing price.
- Planned data center expansion could significantly enhance value.
DigiCo Infrastructure REIT, a recent entrant on the Australian Securities Exchange, has gained attention following E&P Capital’s coverage initiation with a 'positive' outlook. The firm has set a price target of $5.13, which reflects a nearly 20% premium over the stock’s last traded price of $4.32.
A Growing Presence in Data Infrastructure
Having debuted on the ASX in December at $5 per share, DigiCo Infrastructure REIT specializes in owning and developing data centers, an asset class currently benefiting from surging demand for cloud computing and artificial intelligence (AI).
E&P Capital analyst Paul Mason pointed out that DigiCo is among the limited data center-focused listings on the ASX. Given the increasing reliance on digital infrastructure, the company operates in a sector with strong underlying fundamentals.
Expansion Plans to Strengthen Market Position
A major catalyst for DigiCo's future potential is its planned expansion of the flagship Switch Sydney data center. The facility’s capacity is set to increase from 42 megawatts to 88 megawatts. Mason highlighted that this expansion will make the facility "very valuable" amid a global shortfall in high-quality data center supply.
Growth Potential and Key Considerations
While E&P Capital sees growth opportunities ahead, Mason also noted factors that may influence DigiCo's trajectory. The company operates with a relatively higher gearing, an external management structure, and more complex or speculative growth plans compared to other ASX-listed data center firms.
Despite these considerations, Mason remains optimistic, emphasizing that the shortage of quality data center infrastructure worldwide suggests that well-planned developments could be rewarded.
With digital transformation accelerating across industries, DigiCo Infrastructure REIT is positioning itself as a key player in the expanding data center sector. Its upcoming expansion and the overall demand for cloud and AI-driven infrastructure could play a crucial role in shaping its long-term performance.
