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Highlights

  • Stock Performance: Goodman Group shares have dropped 13% year-to-date despite the company's ongoing expansion efforts.
  • Major Development: Goodman has begun construction on its first U.S. data centre, a 49.5 MW facility in Vernon, California, strategically located near Los Angeles.
  • Analyst Outlook: Citi maintains a bullish stance on the stock, issuing a buy rating with an AU$40.00 price target, suggesting a 28% upside.

Despite a sluggish start to the year, industrial property giant Goodman Group (ASX:GMG) is forging ahead with its ambitious growth strategy. Since January, its shares have declined 13%, but recent developments may offer a turning point for investors.

Last week, Goodman announced the commencement of Goodman LAX01 Vernon (LAX01), its first U.S. data centre. The 49.5 MW facility, situated on a 5.6-acre site in Vernon, California, is expected to provide 32 MW of critical IT capacity once fully operational. The company aims to have the data centre powered shell ready by mid-2026.

Strategic Expansion into Data Centres

Goodman LAX01 Vernon is strategically positioned four miles from Downtown Los Angeles and One Wilshire, a major network connection hub for the U.S. West Coast. The location boasts key advantages, including a low latency of 0.35 milliseconds Round-Trip Time (RTT) and proximity to an extensive network of fibre carriers and service providers.

The company acquired the Vernon site in 2023 and has since collaborated with local authorities, including the City of Vernon’s Public Utilities Department, to maximise its potential. The facility is designed with high redundancy and flexibility, catering to the increasing demand for hyperscale and colocation customers in the Los Angeles metro market.

Commenting on the expansion, Goodman’s CEO, Greg Goodman, highlighted the company’s broader ambitions:

"LAX01 continues the build-out of our 5 GW global power bank, supported by our strong balance sheet. It’s a key part of the 500 MW program of new projects we expect to launch by June 2026 across North America, Europe, Australia, Japan, and Hong Kong."

Echoing this sentiment, Goodman North America CEO Anthony Rozic emphasized the facility’s strategic advantages:

"Goodman LAX01 Vernon embodies all the prime characteristics of our targeted data centre locations, from redundant power availability to proximity to key fibre networks and a supportive regulatory framework."

Should Investors Buy Goodman Shares?

Despite the stock’s recent decline, Citi analysts remain optimistic. The brokerage reiterated its buy rating on Goodman shares, setting an AU$40.00 price target. This suggests a potential 28% upside from current levels.