William Blair initiated research coverage of Cyxtera Technologies, Inc. (CYXT $11.56), a global carrier-neutral data center operator focused on retail colocation and interconnection services.
Analyst James Breen estimated the company would generate revenue of $704.1 million in 2021 and $734.1 million in 2022, and that growth would accelerate from 2% annually to the mid- to high single digits.
“As digital transformation continues across the global economy, the importance and mission-critical nature of data centers has never been greater,” Breen said. “The global data center market continues to experience robust growth as it benefits from global secular tailwinds including the shift toward outsourcing, growth in data creation and network traffic, the adoption of cloud services, the deployment of 5G, and the emergence of internet of things, big data analytics, and artificial intelligence and machine learning solutions. Cyxtera’s data centers are strategically located in large metropolitan markets globally, close to major business and financial hubs and a wide range of data center customers that include global enterprises and hyperscale cloud providers.”
Breen continued, “The company has opportunity to grow through filling ample existing capacity and increasing occupancy from 69% to 80%; increasing capacity in key global markets; expanding to new markets in Europe, Asia, and Latin America; and executing on new sales and channel partnership strategies. Furthermore, high-teens interconnection revenue growth should drive the customer ecosystem. The growth plan is supported by ample available capacity across its global footprint to meet customer demand immediately and without large-scale expansion projects. As the business scales, there is high revenue flow-through from increased occupancy and interconnection growth, resulting in meaningful operating leverage.”
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Current Ratings Distribution (as of 1/27/22)
Outperform (Buy): 77%
Market Perform (Hold): 23%
Underperform (Sell): 1%
Inv. Banking Relationships*
Outperform (Buy): 33%
Market Perform (Hold): 8%
Underperform (Sell): 0%
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