Analysts Slashing Price Targets During A Quiet Week
Thanksgiving week is usually quiet yet positive for stocks, and 2023 was no exception. Still, despite recent gains in the real estate investment trust (REIT) sector, analysts were busy sharpening their Thanksgiving knives this week on the price targets of several REITs.
Take a look at four REITs whose current ratings were maintained this week but still experienced significant carvings on their price targets.
NetSTREIT Corp. (NYSE:NTST) is a Dallas-based retail REIT with 547 properties across 45 states. Its single-tenant net leases cover 26 diverse industries. Some of its 85 tenants include Walgreens, 7-Eleven Inc., Lowes Cos. Inc., Dollar General Corp. and Walmart Inc. Of its tenants, 68.6% are investment grade.
NetSTREIT reported its third-quarter operating results on Oct. 25. Funds from operations (FFO) of $0.31 per share beat the analyst estimate of $0.29 and FFO of $0.30 per share in the third quarter of 2022. Revenue of $33.96 million not only beat the estimate of $32.2 million but was 35.8% higher than revenue of $25.01 million in the third quarter of 2022.
On Nov. 22, BTIG analyst Michael Gorman maintained NetSTREIT with a Buy rating but despite the solid third-quarter results, lowered the price target from $23 to $19.
NetSTREIT's recent closing price was $15.46.
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Ashford Hospitality Trust Inc. (NYSE:AHT) is a Dallas-based hotel REIT that focuses on upscale full-service and select-service hotels. Ashford Hospitality Trust is externally advised by Ashford Inc. (NYSEAMERICAN: AINC).
Earlier this year, Ashford Hospitality had 22,316 rooms in 100 hotels across 26 states. Its top markets include Washington, D.C./Northern Virginia, Nashville, Tennessee, Atlanta, Los Angeles and Dallas/Fort Worth. Ashford Hospitality's brands include Hilton, Marriott, Hyatt, Courtyard, Embassy, Sheraton and others.
In July Ashford Hospitality announced it will surrender ownership of 19 hotels across the U.S. to temper its worsening debt. It ceased making mortgage payments on two hotels in Newark, New Jersey, one in Oakland, California, and one in Walnut Creek, California.
On Nov. 7, Ashford Hospitality Trust reported its third-quarter operating results. Adjusted funds from operations (AFFO) of $0.08 was a huge decline from $0.52 in the third quarter of 2022. Revenue of $343 million beat the consensus estimate of $320.62 million and was better than revenue of $328.16 million in the third quarter of 2022.
On Nov. 22, B. Riley Securities analyst Alex Kurtz maintained Ashford Hospitality Trust with a Neutral rating but lowered the price target from $3 to $2.50. Ashford's recent closing price was $2.23.
Highwoods Properties Inc. (NYSE:HIW) is a Raleigh, North Carolina-based diversified REIT that purchases, leases and manages office, residential, retail and hotel properties in eight strong but smaller markets throughout the Southeast U.S. In 2023, it was acquiring land parcels to further diversify its holdings. Highwoods' client base includes the federal government, Bank of America Corp. and MetLife Inc. Highwoods Properties is a member of the S&P Midcap 400 Index.
Highwoods Properties owns 28.5 million square feet of leasable space in eight U.S. markets. As of Sept. 30, its portfolio had an 88.7% occupancy rate with weighted average lease terms (WALT) of six years.
On Oct. 24, Highwoods Properties reported its third-quarter earnings. FFO of $0.93 per share was in line with estimates but down 10.5% from FFO of $1.04 per share in the third quarter of 2022. Revenue of $207.09 million beat the consensus estimate of $206.88 million and was slightly ahead of $207 million in the third quarter of 2022.
FFO guidance for full-year 2023 was modified from $3.69-$3.81 to $3.73-$3.77, essentially keeping the same midpoint of $3.75 per share.
Analysts have not been warm on Highwoods Properties recently. On Nov. 21, Truist Securities analyst Michael Lewis maintained Highwoods Properties with a Buy rating but lowered the price target by 20% from $35 to $28. On Nov. 13, Highwoods received a downgrade from B of A Securities analyst Camille Bonnel from Buy to Neutral with a 31% price target cut from $29 to $20. Bonnel noted that more than a quarter of Highwoods' leases expire through 2025, which may imply higher leasing costs, thus reducing its cash flow.
Mfa Financial Inc. (NYSE:MFA) is a New York-based mortgage REIT (mREIT) that invests in residential mortgage-backed securities (MBS) and residential whole loans. In April, Mfa celebrated its 25th anniversary on the New York Stock Exchange.
In September, Mfa Financial announced the appointment of Michael Roper as its new chief financial officer, succeeding Stephen Yarad.
On Nov. 7, Mfa Financial reported its third-quarter operating results. Non-generally accepted accounting principles (GAAP) earnings per share (EPS) of $0.40 beat the estimates of $0.38 and was well above EPS of $0.28 in the third quarter of 2022. Revenue of $46.14 million beat the estimates of $44.86 million but was lower than third-quarter 2022 revenue of $52.29 million.
On Nov. 21, Raymond James analyst Stephen Lewis maintained Mfa Financial with an Outperform rating while lowering the price target slightly from $13 to $12.50. Mfa's recent closing price was $10.50. Despite the price cut, the third-quarter results suggest things are improving for Mfa Financial.
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