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Equinix Inc EQIX

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Morningstar’s Analysis

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Equinix’s Good Q3 Results Look Much Like Recent Quarters; Nothing New to Justify the Valuation

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Equinix again exceeded FactSet consensus revenue and EBITDA estimates in the third quarter, with overseas revenue making up for weaker results in the Americas. Equinix raised 2020 guidance, but it was mostly due to favorable currency expectations and the inclusion of the recently acquired Bell data centers in Canada. Excluding those factors, the firm slightly reduced its 2020 outlook. While the quarter was very strong, and we expect recent performance to be sustainable, the results and guidance, in our view, don’t justify the significant margin expansion Equinix has seen this year, and we are not materially changing our $500 fair value estimate.

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Company Profile

Business Description

Equinix is a retail provider of data centers, enabling hundreds of enterprise tenants to house their servers and networking equipment in a colocated environment. Tenants can then connect with each other, cloud service providers, and telecom networks. Equinix operates 210 data centers in 55 markets worldwide and owns just less than half of them. The firm has nearly 10,000 customers, including 1,800 networks, that are dispersed over five verticals: Cloud and IT Services, Content Providers, Network and Mobile Services, Financial Services, and Enterprise. About 70% of Equinix's revenue comes from renting space to tenants and related services, and more than 20% comes from connecting customers with each other. Equinix operates as a real estate investment trust.

One Lagoon Drive
Redwood City, CA, 94065
T +1 650 598-6000
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 8,378