Truist cuts Federal Realty shares target citing lower FFO estimates By Investing.com

On Tuesday, Truist Securities adjusted its outlook on Federal Realty (NYSE:) Investment Trust (NYSE:FRT) shares, reducing the price target to $115 from $117 while maintaining a Buy rating on the stock. This decision follows the company’s first-quarter results for 2024.

The securities firm has revised its 2024 and 2025 NAREIT Funds From Operations (FFO) per share estimates for Federal Realty Investment Trust .

The 2024 FFO estimate has been decreased to $6.82 per share, down from $6.84, and the 2025 FFO estimate has been adjusted to $7.22 per share from $7.24. These updated projections represent a year-over-year increase of 4.1% for 2024, followed by a 5.9% rise in 2025.

The new price target of $115 is based on a 5-year levered Discounted Cash Flow (DCF) analysis, which yielded a value of $115.44. This valuation incorporates a perpetuity growth rate of 3.25% and an 8.9% discount rate.

Additionally, the Net Asset Value (NAV) per share of $125.15 was calculated using a forward capitalization rate of 5.6% based on the next 12 months’ Net Operating Income (NOI).

Truist Securities’ decision to maintain a Buy rating indicates a positive outlook on the stock, despite the slight reduction in the price target and FFO estimates. The adjustments reflect the firm’s analysis of the real estate investment trust’s performance and future earnings potential.

The updated price target and FFO estimates are the direct result of the company’s recent financial outcomes and Truist Securities’ subsequent analysis. These changes are aimed at providing investors with the most current information on Federal Realty Investment Trust’s valuation.

InvestingPro Insights

Recent data from InvestingPro shows Federal Realty Investment Trust (NYSE:FRT) with a robust Market Cap of approximately $8.44 billion, reflecting its significant presence in the real estate investment sector. The company’s commitment to shareholder value is evident through its impressive record of maintaining dividend payments for 52 consecutive years and raising them for 17 consecutive years. This consistency underscores the InvestingPro Tip highlighting FRT’s stable income-generating capability.

InvestingPro data indicates a P/E Ratio of 36.1, which is above the industry average, suggesting that the stock is trading at a premium. This aligns with the InvestingPro Tip noting that FRT is trading at a high earnings multiple. Nevertheless, the company’s solid gross profit margin of 68.53% over the last twelve months as of Q1 2024 demonstrates its ability to efficiently manage its operations and maintain profitability, which is also supported by the InvestingPro Tip that analysts predict the company will be profitable this year.

FRT’s dividend yield stands at a healthy 4.32%, making it an attractive option for income-seeking investors. It’s also worth noting that the company is trading near its 52-week high, with the price at 93.87% of the peak, reflecting investor confidence in its performance and future prospects.

For those interested in further insights, InvestingPro offers additional tips on Federal Realty Investment Trust, enhancing your investment research. Utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the full range of InvestingPro Tips to inform your investment decisions.

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