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Switch, Inc.: Initiation of Research Coverage

Wednesday, November 1, 2017

William Blair & Company initiated research coverage of Switch, Inc. (SWCH $19.35), a cutting-edge data center designer, owner, and operator with four mega-campuses in the United States.

Analysts Jim Breen and Jason Ader estimated the company would generate revenue of $375.0 million and earnings per share of $0.04 in 2017, followed by revenue of $430.8 million and EPS of $0.21 in 2018.

“In our view, the migration of IT infrastructure from on-premises data centers to hyperscale multitenant facilities is still in the early stages, which should result in continued high demand for Switch’s properties,” Breen said. “Over the past five years, the wholesale and retail data center industries have experienced tremendous growth. Switch has over 700 customers, including leading tech companies eBay, Amazon, and Google, and it owns and operates mega data centers in Las Vegas, Tahoe-Reno, and Michigan, with its Atlanta campus scheduled to launch in 2019. It is the dominant data center provider in Nevada, which serves as a hub for supply-constrained Silicon Valley. Switch is also part of a joint venture that has data center facilities in Milan, Italy, and Bangkok, Thailand.”

“Switch’s Las Vegas 7 and Reno 1 facilities are the two largest data centers in the world in terms of power capacity,” Ader said, “and its data center designs are considered among the most advanced in the industry. Over the next decade, Switch plans to increase its megawattage of power capacity by 186% and square feet of space capacity by 202%.”

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Coverage Universe
Outperform (Buy): 63%
Market Perform (Hold): 34%
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Outperform (Buy): 19%
Market Perform (Hold): 9%
Underperform (Sell): 0%

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