Why GDS Holdings shares surged 10% on Monday

A significant increase in price target from an analyst led to significant gains for GDS Holdings‘ (GDS -5.69%) Stocks listed in the US on Monday. The Chinese data center company saw its American Depositary Shares (ADS) rise as much as 10% on the day. This percentage was almost 10 times the earnings S&P 500 the index, which closed 1% higher.

A massive lift

Long before the market opened that day, Jefferies Forecaster Edison Lee made a rather dramatic change in GDS’s fair value assessment. While he maintained a buy recommendation on the specialty technology stock, he raised his price target much higher. It is now at $25.05 per ADS versus $16.69 previously.

It was not immediately apparent why Lee changed his price target.

Interestingly, the move came less than two days after the company’s last scheduled earnings release. Collectively, Jefferies and its peers who track the company’s stock are modeling a deeper net loss for the second quarter (the equivalent of $0.26 per share versus $0.17 for the same period in 2023). On the other hand, they believe that the specialty technology company will manage to grow its revenue by 15% year-over-year to nearly $390 million.

Fresh quarterly results on tap

GDS will release its results and is hosting a conference call to discuss them before the US market opens on Wednesday. Shareholders won’t be hoping for a repeat of the first quarter’s performance, as the company missed analysts’ consensus estimates for a net loss. However, it met revenue expectations for the period.