MLV & Co Initiates Coverage On CyrusOne On Mixed Factors

In a report published Thursday, MLV & Co analyst Jonathan Petersen initiated coverage on CyrusOne (NASDAQ: CONE) with a Hold rating and $30.00 price target.

In the report, MLV & Co noted, "We are initiating on CONE with a HOLD rating and a $30 price target. CONE has a strong sales force, which has been effective in attracting corporate users to their highly-efficient data centers. We see corporate data center outsourcing as one of the major drivers of data center demand and CONE has established itself as the go-to provider for Fortune 1000 companies. That said, CONE receives 30% of its revenue from energy companies, and over half its revenue from facilities located in Texas. Given the steep drop in oil prices in recent months, and cost-cutting efforts going on inside energy firms, we are concerned that data center absorption will not be as strong in Dallas and Houston as it was in 2014 and rents could be under some pressure, which will reduce development yields."

CyrusOne closed on Wednesday at $28.44.