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Cyxtera Technologies Inc (NASDAQ:CYXT) was upgraded to Buy from Neutral, with its price target maintained at $13 per share by a BofA analyst on Wednesday.
The upgrade decision is based on the company’s forward operating progress and the stock’s recent pullback, the analyst said.
“CYXT shares are down >36% since reporting its 2Q22 earnings, which could relate to its S-3 shelf registration for shares covering 73% of shares outstanding; unfavorable article from Zerohedge (16 Aug 2022); and rising likelihood for Cyxtera to remain a stand-alone entity,” wrote the analyst. “Our Buy rating on CYXT is based on prospects to sustain mid-single digit core revenue growth for at least the next 18-months; improve funding for development as well as possible acquisitions; and retain positive longer-term strategic optionality.”
The analyst said the stock now trades at a valuation discount of 40%, which they believe improves risk-reward scenarios to invest in Cyxtera.
“Cyxtera is showing forward progress on monetizing its existing portfolio to support mid-single digit core revenue growth (on a yoy, constant-currency basis), while management remains upbeat on its pipeline and prospects to improve utilization across its market portfolio,” he explained. “The improvement in utilization should be a positive leading indicator for revenue performance given that utilization reflects capacity sold, even if it is not fully-billed.”
