This REIT Could See Some Headwinds in December

DLR's recent rally could be over

Digital Content Manager
Nov 30, 2022 at 1:28 PM
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In August, we warned against investing in real estate investment trusts (REITs) in the coming month, based on miserable seasonality trends and a slew of other factors. One of the names that we highlighted was Digital Reality Trust Inc (NYSE:DLR).

Our prediction, for DLR specifically, wound up being spot on, as the equity began its plummet toward its Oct. 13, six-year low of $85.76 in the middle of the month and wound up losing almost 20% in September -- marking its worst month on record. 

Since this low, however, DLR has enjoyed a notable rebound. The security is set to string together it's second-straight monthly win, and gapped above recent pressure at the $102 mark in mid-November. This could be the extent of the rally, however, as the REIT loses steam near the 80-day moving average.

In fact, this trendline has had historically bearish implications in the past, according to a study from Schaeffer's Quantitative Analyst Rocky White. This data shows that DLR has seen five similar occurrences during the last three years. One month later, the security was lower 80% of the time, averaging a 2.5% drop. A similar move from its current perch would put Digital Reality Trust stock at $105.80. 

dlr nov 30

The stock could be ripe for a round of bear notes. Of the 15 in coverage, all but four call it a "buy" or better. Plus, the 12-month consensus price target of $125.53 is a 15.8% premium to current levels. 


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