Iron Mountain stock just hit a crucial resistance after earnings: is it a good buy?

Iron Mountain stock price soared to a record high on Thursday after the company published a strong financial report. It rose to $125.26, up by 78% from its lowest level in April, pushing its market capitalization to over $36 billion. This rally may continue in the foreseeable future as demand continues rising.

Iron Mountain’s business is thriving as the AI boom continues

The IRM stock price has been in a strong uptrend this year, a trend that accelerated after it released its financial results on Wednesday. This growth is being driven by the soaring data center demand in the United States and other countries.

In a statement, the company said that its revenue surges to a record high of $1.94 billion, up by 17.2% YoY, helped by its storage rental business. The service revenue rose by 31% to over $841 million. 

More data shows that Iron Mountain has become a more profitable company, with its net income rising to $149 million. It made over $16 million in the same period last year. In a statement, the company’s CFO said:

“We are accelerating our cross-selling efforts in ALM and Digital and we are off to a strong start to the year in data center leasing, where we have already leased 32 megawatts through April. Our pipeline momentum continues to build against the 400 megawatts of data center capacity energizing and available over the next 24 months.”

Iron Mountain's management believes that the company’s growth will accelerate in the coming quarters, which is notable for a company that has been in business in the last few decades.

The management expects its revenue will come in at between $7.8 billion and $7.9 billion, up by 14% from the same period a year earlier. The adjusted EBITDA is expected to come in at between $2.92 billion and $2.96 billion, while the AFFO will jump by over 13%.

Still, a major concern among analysts is that Iron Mountain's valuation has become stiff as investors bet on its data center business growth.

Data compiled by Seeking Alpha shows that the forward price to its adjusted funds from operations (AFFO) stands at 20, higher than the sector median of 15. Similarly, the price to FFO ratio has jumped to 28.

Iron Mountain stock price analysis as it hits key resistance 

IRM stock chart | Source: TradingView 

The weekly timeframe chart shows that the IRM stock price has been in a strong uptrend in the past few years. It has now retested the important resistance point $124.30, its highest level in November 2024. 

On the negative side, this could be a sign that the stock has formed a double-top pattern whose neckline is at $69.76, its lowest level in April last year. A double-top is one of the most common bearish reversal signs in technical analysis.

On the other hand, there are signs that the stock has the momentum as the Average Directional Index (ADX) has moved to above 20. An ADX above 20 is a sign that the uptrend is continuing.

Therefore, a move above the uptrend at $124 will point to more gains, potentially to the key resistance level at $130.