On Wednesday, Piper Sandler adjusted its outlook on shares of The Macerich Company (NYSE:NYSE:MAC), raising the price target to $17 from $14 while keeping an Underweight rating on the stock.
The firm acknowledges the efforts of CEO Jack Hsieh's turnaround plan for the real estate investment trust, yet expresses caution, suggesting that the current stock price may already reflect the plan's anticipated success. Trading near its 52-week high of $22.27 and showing impressive returns of 63% over the past year, InvestingPro analysis suggests the stock may be overvalued at current levels.
The analyst pointed out that Macerich's stock is trading at approximately 13 times the 2025 estimated consensus, compared to Simon Property Group (NYSE:SPG) trading at around 14 times, despite Macerich's management indicating that it would not be clear until mid-2026 if they will meet their funds from operations (FFO) goal of $1.70 to $1.80 in 2028.
The comparison highlighted that Macerich is still in the process of creating liquidity as it executes its strategic plan, while Simon Property Group is estimated to generate roughly $900 million in free cash flow after dividends. Notable for investors, InvestingPro data shows Macerich currently trades at a P/E ratio of 59.14x, with short-term obligations exceeding liquid assets, as indicated by a current ratio of 0.68.
Macerich's financial strategy and progress were also examined, with the recent equity raise and its deployment factored into Piper Sandler's updated model. The firm now estimates that Macerich's net debt to adjusted EBITDA ratio will be 8.5 times in 2025, which contrasts with Simon Property Group's estimated ratio of 5.4 times.
The report reiterated an Underweight rating, suggesting that the stock may be overvalued given the timeline and uncertainties associated with the company's turnaround plan. The analysis reflects a cautious approach to Macerich's stock, taking into account the detailed financial metrics and comparison with industry peers.
In other recent news, The Macerich Company announced its third quarter 2024 earnings, revealing a 14.4% year-over-year decrease in core Funds From Operations Per Share (FFOPS) to $0.38, attributed to a shortfall in non-rental income. Goldman Sachs (NYSE:GS) reiterated a Sell rating on the company and revised its 2025 forecast for Macerich's FFO per share downwards by 9%, accounting for various financial updates.
The company has also announced a public offering of 18 million shares of common stock, with an additional 2.7 million shares available to underwriters, aiming to repay a $478.0 million mortgage loan secured by Macerich's Washington Square property.
In analyst updates, JPMorgan (NYSE:JPM) raised its price target for Macerich from $16.00 to $22.00 but maintained an Underweight rating, while Mizuho (NYSE:MFG) upgraded Macerich to a neutral rating and raised its price target to $22. These are all recent developments and provide investors with insights into the company's strategic direction and financial health.
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