Analyst Doubts Macerich's New CEO Strategy, Can They Turn Things Around?

The Macerich Company MAC shares traded lower on Wednesday after Piper Sandler analyst Alexander Goldfarb downgraded the stock from Neutral to Under Weight and lowered the price target from $17 to $11.

On Tuesday, the company reported Q1 sales of $208.783 million, beating the consensus of $205.112 million and FFO of $0.33.

The company welcomed Jackson Hsieh as the new CEO and president and withdrew its FY24 guidance.

The analyst writes that they think Hsieh is asking shareholders for another 3–4 years to restructure the company after enduring the same game plan that was executed twice before over the past decade is “a bridge too far.”

Goldfarb argues that management is opting not to directly tackle the balance sheet issues. Instead, they plan to pursue growth in Net Operating Income (NOI) through strategies such as leasing, asset givebacks, and a planned injection of just $500 million in equity over the next three to four years.

Consequently, the analyst lowered estimates for FY24 FFO by $0.23 to $1.58 and FY25 by $0.32 to $1.50, which reflects Q1 results, expected $15 million annualized impact of 15 Express store closures, refinancings, and assumption of H2 FY24 dispositions of $400 million and $600 million in FY25. 

Investors can gain exposure to the stock via Invesco S&P SmallCap Financials ETF PSCF and Vanguard S&P Small-Cap 600 Value ETF VIOV.

Price Action: MAC shares closed down 2.18% at $13.46 on Wednesday.

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