Analyst Note| Matthew Dolgin, CFA |
CoreSite reported strong third-quarter results as the firm continued to benefit from secular tailwinds for data centers. The firm’s success with three scale (smaller than hyperscale, but bigger than retail colocation) deals contributed to solid revenue growth, beating our expectations. The firm also had its best quarter for new lease signings thus far this year. Management said that customers have adapted to architecting their IT in a virtual environment, which has reinforced and expanded the firm’s sales pipeline. The firm slightly raised its 2020 guidance for adjusted EBITDA and funds from operations. Our long-term outlook for the firm is unchanged, and we don’t plan to materially change our $108 fair value estimate.