News of a significant price-target boost from an analyst tracking GDS Holdings (NASDAQ: GDS) was the main catalyst behind the stock's jump on Monday. It rose by more than 7% that day on the move, a far greater rise than the 0.6% posted by the bellwether S&P 500 index.
A serious price-target increase
On Monday morning, TD Cowen's Michael Elias upped his price target on GDS Holdings to $39 per share, well above his previous $27 estimation. In doing so, he maintained his buy recommendation on the data center stock.
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Elias, according to reports, made his move after updating his model on GDS' projected performance. The update incorporates the figures from the company's third-quarter earnings report, which was published last November.
The TD Cowen prognosticator expects the company to deliver slightly better-than-expected fundamentals for Q4, specifically revenue and earnings before interest, taxes, depreciation, and amortization (EBIDTA). Elias was also encouraged by management's confidence that it would meet its annual target for center installations in 2024.
He's not the only analyst with a bullish view on the Asian company's future. At the end of January, JMP Securities initiated coverage on digital infrastructure stocks. According to reports, one of the six titles launched with the company's market outperform (buy, in other words) rating was GDS Holdings.
Time to hang on?
Since it's a Chinese stock and its home country is currently in a trade dispute with the U.S., the ride is going to be bumpy with GDS Holdings stock no matter how well (or badly) the company does. Long term, however, it looks like a smart play on the inevitable expansion of data centers, especially considering the heavy resource requirements of artificial intelligence (AI) functionalities.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
