Maxim Group downgraded Data Storage Corporation (NASDAQ: DTST) from Buy to Hold, citing limited visibility into management’s new strategic direction following the sale of its CloudFirst subsidiary.
The company completed the divestiture of CloudFirst to a private equity-backed acquirer on September 11, generating net proceeds of about $24 million. Management said up to 85% of the proceeds would be used for a tender offer, with the remainder earmarked for acquisitions and investments in AI-enabled software, GPU technologies, or cybersecurity.
Post-sale, the company’s remaining VoIP segment contributes roughly $1.2 million in annual revenue.
Maxim said it had lowered its 2025 and 2026 estimates to reflect the loss of CloudFirst, which had been the bulk of DTST’s revenue, and noted uncertainty about the timing of future acquisitions and business pivot efforts.
