What happened

Shares of data center operator Switch (NYSE:SWCH) have bounced back today, up by 12% as of 11:30 a.m. EST, after getting a big upgrade from Wall Street. Shares had plunged yesterday after the company missed earnings expectations in the third quarter. Meanwhile, Tiger Global also disclosed that it has boosted its stake in the company.

So what

Raymond James has upgraded its rating on Switch shares from market perform to strong buy and assigned a $11 price target. Analyst Frank Louthan believes yesterday's drop was overdone, and argues that shares now offer a "compelling" valuation. Louthan acknowledges that investors have "limited visibility" heading into 2019, particularly as the schedule of Switch's planned data center in Atlanta has been pushed back.

Data center

Image source: Getty Images.

CFO Gabe Nacht said earlier this week that the data center will open in the fourth quarter, in part due to weather conditions.  Still, Louthan says demand remains strong, and current share prices don't properly reflect Switch's operational potential.

Now what

Meanwhile, Tiger Global filed its Form 13-F yesterday for the third quarter, and disclosed that it had significantly boosted its stake in Switch. The fund held nearly 2.5 million shares at the end of the third quarter, nearly triple the 900,000 shares it had at the end of the second quarter.

Beyond Raymond James, other analysts had defended Switch in wake of its third-quarter results. Credit Suisse maintained an outperform rating alongside a $14 price target, Citigroup stuck by its buy rating as well, and Stifel is also maintaining a buy rating and $13 price target.

Nacht said the company is still finalizing its budget and planning cycle for 2019 and isn't ready yet to discuss a detailed forecast for next year, but remains comfortable with a long-term EBITDA margin target of 51%.