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Switch Turns Off Some Investors With Its Pricey Valuation

Shanthi Rexaline

Citi initiated coverage of Switch Inc (NYSE: SWCH) with a Neutral rating and a $20 price target. The firm attributed its Neutral stance to the premium valuation of the company's shares.

Analyst Michael Rollins noted Switch shares were trading at a premium on FV/OIBDA and P/AFFO multiples versus the average of his data center coverage group using his 2019 forecasts.

Switch offers data center colocation, with a focus on high reliability and power density, served by renewable energy, Citi said. The firm also said the company has built a strong presence in the Las Vegas market, with an above-average return on capital versus its competitors.

Presently, Citi said, Switch has built a strong presence in the Las Vegas market, with an above-average return on capital versus its competitors, and is looking to expand its success to three new U.S. markets as well as through its investment stakes.

"Switch is also in an early stage of ramping demand in its new markets that are more competitive & may be subject to an extended ramp & lower returns than its current footprint," the firm added.

Related Link: Cramer Likes The Data Center Industry But Isn't A Buyer Of Switch

Latest Ratings for SWCH

Date Firm Action From To
Oct 2017 Goldman Sachs Initiates Coverage On Neutral
Oct 2017 JP Morgan Initiates Coverage On Overweight
Oct 2017 Credit Suisse Initiates Coverage On Outperform

View More Analyst Ratings for SWCH
View the Latest Analyst Ratings

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