Equinix Inc (EQIX) Solidifies Global Presence in Network-Dense Colocation Space, Eyes 2015 REIT ConversionMay 20, 2013
Equinix (EQIX) is proving to be a solid global player in the network-dense colocation space, reporting record bookings from cloud customers in its March quarter results and making acquisitions to expand into new geographies, says Todd Weller, Managing Director at Stifel, Nicolaus & Co., Inc.
“There’s been a lot of controversy recently around whether cloud is a positive or a negative driver for data center companies, and we think it is a positive driver, as we’ve talked about, and Equinix pointed out that they had record bookings from cloud customers in the quarter,” Weller said.
FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE.
Weller is bullish on the network-dense colocation space, because it has higher barriers of entry and is less prone to impacts from increased supply in addition to being a beneficiary of secular drivers such as mobile, cloud and social media. In this space, EQIX has expanded its global presence by making small acquisitions; however, EQIX is facing challenges as it eyes a REIT transition in 2015, Weller says.
“In the network-dense colocation space, pretty much we’ve seen Equinix make smaller tuck-in acquisitions to expand into new geographies. One of the key advantages they have is they are the only global player,” Weller said. “The fundamentals there are good, and I think valuation is attractive. I think one near-term challenge from a stock perspective is that we may be in a vacuum period in terms of who the incremental buyer of the stock is, given the company is in the midst of converting to a REIT on January 1, 2015.”