Most long-term investors are familiar with the consequences of stock prices experience after an analyst downgrade. Stocks can also slide when analysts maintain previous ratings but slash stock price targets by 10% or more.
As Wall Street grapples with Jerome Powell's new "higher for longer" message on rate cuts and stronger-than-expected economic data, many analysts have been slashing price targets on interest-sensitive stocks such as real estate investment trusts (REITs). Over the past week, 44 REITs across multiple subsectors have had price target cuts, with no let-up in sight.
Take a look at four of the most recent REITs to have analysts slash price targets. It's also noteworthy that three of the four had cuts from more than one analyst:
Alpine Income Property Trust Inc. PINE is a Daytona Beach, Florida-based retail REIT that owns and operates 138 high-quality net-leased properties of 3.8 million square feet across 35 states. Sixty-five percent of its tenants are investment-grade companies such as Lowe's Cos. Inc., Dollar Tree Inc., Walgreens, Walmart Inc., Advanced Auto Parts Inc. and Dick's Sporting Goods Inc. As of March 30, Alpine Income Property Trust had an occupancy rate of 99%.
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On April 18, Alpine Income reported its first-quarter 2024 operating results. Funds from operations (FFO) of $0.41 per share topped the Street's view of $0.38 per share and its first-quarter 2023 FFO of $0.36 per share. Revenue of $12.47 million beat analysts' estimates of $11.66 million and was 116% above revenue of $11.17 million in the first quarter of 2023. Alpine Income Property Trust also maintained its full-year 2024 adjusted funds from operations (AFFO) guidance from a range of $1.53-$1.58 per share, slightly above the consensus estimate of $1.54 per share.
On April 19, JonesTrading analyst Jason Weaver maintained Alpine Income Property Trust with a Buy but lowered the price target from $19 to $18. On the same day, Stifel analyst Nathan Jones maintained a Buy on Alpine Income Property Trust but lowered the price target from $19 to $18.75.
Crown Castle Inc. CCI is a Houston-based specialized REIT that owns, operates and leases cell towers long-term. Crown Castle owns more than 40,000 cell towers, 90,000 route miles of fiber and 115,000 small cells in its portfolio. It works with businesses and governments to design and build solutions that meet connectivity needs like wireless coverage and custom fiber optic networks.
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On April 17, Crown Castle delivered its first-quarter operating results. AFFO of $1.72 beat the estimates of $1.69 per share but was well below $1.91 in the first quarter of 2023. Revenue of $1.64 billion told a similar story, topping the analyst estimate of $1.63 billion but declining from $1.77 billion in the first quarter of 2023. Full-year 2024 AFFO guidance of $6.85-$6.97 billion was better than the $6.88 consensus.
Crown Castle has been in the news in recent months because of the in-fighting between Boots Capital Management and Crown Castle's board of directors. Boots Capital, along with Crown Castle Co-Founder, Chairman and CEO Ted Miller, have asserted that the present board and management have underperformed and done a disservice to its shareholders. On April 11, Miller issued a statement that a representative from Boots Capital should be added to the Crown Castle Board rather than new President and CEO Steven Moskowitz.
On April 19, the board stated that it would not add Moskowitz as a director although he has been appointed president and CEO because it wished to avoid the expense and distraction of a lawsuit filed by Miller.
On April 19, Wells Fargo analyst Eric Luebchow maintained an Equal-Weight rating on Crown Castle but lowered the price target from $115 to $100. The same day, Argus Research analyst Marie Ferguson downgraded Crown Castle from Buy to Hold with no price target given. Bank of America Securities analyst David Barden maintained Crown Castle at Neutral and lowered the price target from $120 to $105.
Analyst Ferguson noted, "We expect the shares to continue to reflect sector rotation due to high interest rates and slower growth as industry-wide demand for wireless communications equipment remains sluggish."
On April 18, analysts at Jefferies, Scotiabank and BMO Capital Markets all maintained previous ratings on Crown Castle and all three also cut the price target. The deepest cut was from Scotiabank analyst Maher Yaghi, who slashed the price by 11.2% from $133 to $118.
Prologis Inc. PLD is a San Francisco-based industrial REIT that owns/manages approximately 1.2 billion square feet in 5,618 industrial logistics properties throughout the U.S. and 18 other countries. Prologis leases space and supplies equipment, robotics and other services to its customers.
On April 17, Prologis delivered its first-quarter 2024 earnings. Core FFO of $1.28 per share met the consensus estimate and was better than Prologis' Q1 2023 FFO of $1.22 per share. Revenue of $1.828 billion missed the consensus estimate of $1.865 billion but topped first-quarter 2023 revenue of $1.634 billion.
Prologis also reduced its full-year core FFO from $5.50-$5.64 to $5.45-$5.55 per share. Occupancy guidance of 96.5% to 97.5% was reduced to 95.75% to 96.75%.
Later that day, Barclays analyst Brendan Lynch maintained Prologis at Overweight but lowered the price target from $141 to $135. On April 18, Evercore ISI Group analyst Steve Sakwa maintained Prologis at In-Line but lowered the price target from $136 to $123. UBS analyst Brent Dilts maintained Prologis with a Buy while lowering the price target from $151 to $138.
Host Hotels & Resorts Inc. HST is a Bethesda, Maryland-based hotel REIT with 77 hotels containing 42,000 rooms in large markets across the U.S. Host Hotels is the only lodging REIT in the S&P 500 and has been in the index since 2007. Its hotel brands include Marriott, Hyatt, Four Seasons and Hilton.
On April 19, UBS analyst Robin Farley maintained a Neutral rating on Host Hotels and lowered the price target from $21 to $20. Wells Fargo has an Overweight position and a $23 price target from March. Raymond James and Barclays have Outperform and Overweight positions, respectively, on Host Hotels from March as well.
Host Hotels will announce its first-quarter operating results on May 2.
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