Our $950 target price for Equinix is based on the average of the following methodologies:

Our DCF analysis is based on revenues that scale to $13.6 billion by 2030 and an EBITDA margin expanding to 54%. Based on these assumptions, including a WACC of 6.4% a target debt-to-total capital ratio of 30%), and a consolidated terminal growth rate of 3.0%, we arrive at an operating enterprise value estimate of roughly $105 billion at year-end 2025. This is adjusted for net debt and other adjustments for investments and NOLs to arrive at an equity value of around $95.5 billion or $954 per fully diluted share.       
On an EBITDA basis, we apply a 23.0x EV/EBITDA multiple on our 2025 EBITDA estimate of $45.7 billion. Our multiple reflects an estimated 3-year EBITDA CAGR of 9.9% between 2025-2028, yielding a fair value of around $940 per share.

On an AFFO basis, we apply a 25.0x P/AFFO multiple on our 2025 AFFO estimate of $38.04 per share. Our multiple reflects an estimated 3-year AFFO CAGR of 6.7% between 2025-2028, yielding a fair value of around $951 per share. 

Key risks to the achievement of our target price include: 1) valuation elevated vs. historical levels; 2) interconnection consolidation from SDN and move to 100G; 3) acquisition integrations; 4) wholesale/retail lines blurring; and 5) rising rates. Other risks include the company's heavy investment in new projects. It is likely to still experience share price volatility and has some financial leverage.


Investment risks include: 1) product category growth is difficult to estimate; 2) pricing and demand for Equinix's colocation space and interconnection services may not increase as we have anticipated and forecast; 3) incremental revenue is heavily skewed to the success of selected markets; 4) capital spending could pick up with a reinvestment cycle; 5) rising interest rates could be a headwind on the multiple and valuation; and 6) our discretionary free cash flow or AFFO metrics may overstate the long-term free cash flow prospects for the company, depending on long-term capital intensity and growth initiatives. We also recognize the share price could decline to the extent REIT multiples fall and create a more challenging comparable to EQIX. The previously disclosed subpoenas from the DOJ and SEC could still identify a concern and present a risk for EQIX shareholders.


If the impact from these risks turns out to be greater or less than we anticipate, the shares could fail to achieve or rise above our target price.