BofA Downgrades Vornado Realty Trust On Low Near-Term Visibility

Vornado Realty Trust’s VNO fourth-quarter conference call suggested an 8% decline in 2020 adjusted funds from operations.

The bankruptcy filing by Forever XXI in the US poses additional downside risk to the real estate company’s projections, according to BofA Securities.

The Analyst

BofA’s James Feldman downgraded Vornado Realty Trust from Buy to Neutral, reducing the price target from $71 to $68.

The Thesis

Although Vornado Realty Trust’s shares have already responded to the news, the lack of earnings visibility could continue to be an overhang on the stock in the near term, Feldman said in the note.

The New York City market is improving, and Vornado Realty Trust’s value creation potential remains intact, the analyst mentioned.

Management expects growth to return in 2021. Feldman added, however, that investors could remain skeptical till management provides more specific details of growth drivers.

Vornado Realty Trust’s 2020 outlook came in below expectations. The analyst lowered the estimate for funds from operations to $3.21 per share for 2020 and to $3.39 per share for 2021.