As a leading provider of co-location services, Equinix Inc. (EQIX) is well positioned in the market. The company delivered decent third quarter numbers and provided encouraging guidance for the fourth quarter and fiscal 2010.
We see a steady increase in the client base and strategic acquisitions that could enhance its revenue potential and expand its geographic reach. Though increased competition, European exposure, industry consolidation, and a long sales cycle will remain causes for concern, we believe that Equinix efforts to expand current facilities and its recurring revenue model will support the stock.
We upgrade the stock from Neutral to Outperform rating. Our target price of $97.00 represents a multiple of 129.3x fiscal 2010 EPS estimate above the industry average and S&P 500.