By Sam Boughedda
Citi said in a note on U.S. cable, telecommunications operators and telecommunications infrastructure that the firm has set Equinix (NASDAQ:) as its top-ranked communications infrastructure pick and Crown Castle (NYSE:) as its new top tower pick. Equinix also remains Citi’s top data center pick.
“We are taking a more positive stance on comm services relative to comm infrastructure largely on valuation, while also considering other factors, including crowding/investor sentiment, potential catalysts, and consensus expectations,” wrote Citi analysts.
On Equinix, the analysts stated they believe data centers may have better aggregate pricing power to respond to the rise in energy costs as well as the rise in rates.
“We continue to learn of forward progress by enterprise firms to pursue digital modernization that we believe is feeding into the broadening of demand for data centers,” they added.
Citi is moving Crown Castle to its top-ranked pick due to a higher dividend yield, which the firm believes should grow another 7% during 2023. “The absorption of higher interest expense remains a possible risk, while we expect solid organic leasing for towers and forward progress for the small cell business during 2023,” the analysts stated.
Both Equinix and Crown Castle have risen over 2% Thursday.
