On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its financial outlook on Kilroy Realty Corporation (NYSE:KRC) shares, reducing the price target to $34 from the previous $40 while keeping a Hold rating on the stock.
The adjustment follows the company's first-quarter results for 2024 and takes into account revised leasing and interest rate expectations.
The bank's analyst provided updated forecasts for Kilroy Realty's future funds from operations (FFO) per share, with the 2024 estimate now set at $4.23, down from the prior $4.34.
The projections for 2025 and 2026 have also been revised to $4.16 and $4.49, respectively, marking a decrease from earlier estimates of $4.78 and $4.58.
These changes reflect the anticipated impact of higher interest rates that are expected to persist longer than previously assumed.
In addition to FFO adjustments, Deutsche Bank also revised its adjusted funds from operations (AFFO) per share estimates for Kilroy Realty.
The new AFFO per share forecasts for 2024, 2025, and 2026 stand at $3.72, $3.38, and $3.41, respectively. This represents a downward revision from the former estimates of $3.47 for 2024 and an increase from the earlier $3.26 for 2026, with the 2025 estimate seeing a significant cut from $4.08.
The analyst noted that despite a challenging earnings outlook for Kilroy Realty, the current discounted valuation of the stock appears to largely factor in these difficulties.
The bank's 2025 FFO per share estimate of $4.16 is notably lower than the consensus estimate of $4.24, indicating a more conservative view on the company's leasing activities.
InvestingPro Insights
In light of Deutsche Bank's revised financial outlook for Kilroy Realty Corporation (NYSE:KRC), current metrics and insights from InvestingPro provide additional context for investors. Kilroy Realty's market capitalization stands at approximately $3.8 billion, with a P/E ratio reflecting investor expectations at 18.26 and a slightly higher adjusted P/E ratio for the last twelve months as of Q1 2024 at 18.49. Despite a slight revenue decline of 0.78% during the same period, the company's gross profit margin remains robust at 68.0%, underscoring efficient cost management.
InvestingPro Tips further reveal Kilroy Realty's commitment to shareholder returns, having raised its dividend for 6 consecutive years and maintained dividend payments for 28 consecutive years. Additionally, with liquid assets surpassing short-term obligations and analysts predicting profitability for the year, the company's financial health appears stable. Kilroy Realty's dividend yield stands at an attractive 6.73% as of the last dividend date, which was March 27, 2024.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available, which can be accessed through the company-specific page on InvestingPro. To take advantage of these insights and enhance your investment strategy, use coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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