UBS opens DigiCo REIT coverage with 'buy' rating
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The news: UBS has initiated coverage of HMC Capital's new real estate investment trust DigiCo Infrastructure REIT with a 'buy' rating.
The numbers: UBS set a price target of $5.60 on the stock, which debuted at $5 per share in December.
Shares in DigiCo — which owns, operates and develops data centres with a portfolio of 13 assets — were down 10.6% to $4.27 by 12:20pm AEDT, as part of a global selloff in the sector amid fears over low-cost Chinese AI model DeepSeek that could impact demand for data centre capacity.
The context: UBS analysts said they are "strong believers" in the structural thematics of data centres, due to an industry shift from in-house to co-location, a shift into cloud computing, and increased data generation from the uptake of artificial intelligence.
What they said: "In our view, [DigiCo] is well positioned to leverage existing assets and new sites — particularly SYD1, where current available capacity and the densification of existing space and expansion, together with new ownership and upcoming government certification has the ability to materially increase both the earnings and valuation multiple profile of the group," the analysts said.
The source: UBS research
