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Equinix Inc EQIX

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Business Remains Strong at Equinix As the Firm Again Exceeds Estimates in Q2 and Raises Guidance

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Equinix’s second quarter was strong in virtually every aspect, as the firm exceeded FactSet consensus revenue estimates and raised its full-year guidance. The second half is unlikely to be quite as strong as the first, as the firm laps 2020 cross connect price increases and sees some margin pressure. Everything Equinix has reported, however, indicates the long-term trajectory remains extremely positive, as enterprises continue to transform and integrate their networks to hybrid cloud and multicloud architectures that lead them to Equinix and the cloud providers that have onramps at Equinix facilities. We continue to have valuation concerns about the stock, as the $520 fair value estimate we are maintaining implies the stock is significantly overvalued. However, we don’t expect any hiccups in Equinix’s business to be a catalyst to drive the stock lower.

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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 227 data centers in 63 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 15% comes from connecting customers with each other. Equinix operates as a real estate investment trust.

Contact
One Lagoon Drive
Redwood City, CA, 94065
T +1 650 598-6000
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 10,013

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