Wednesday - Evercore ISI has initiated coverage on Rexford Industrial Realty (NYSE:REXR), a Southern California-focused industrial real estate investment trust (REIT), with an Outperform rating and a 12-month price target of $54.00. The firm's analysis suggests a 23% potential upside for the stock, including dividends.
The new rating is based on the company's ownership of "irreplaceable assets" in Southern California. Despite an expected slowdown in market rent growth in the region, which is anticipated to drop by 2% for Rexford's competitive set, Evercore ISI believes the current stock price already reflects these market conditions.
The firm noted that Rexford's year-to-date performance has lagged behind its peers, with a decline of 17.8% compared to the 11.3% drop for industrial REITs and a slight 0.2% decrease for REITs overall.
Evercore ISI suggests that investors may need to be patient with Rexford's stock, which could see little movement over the next three to six months. This forecast is based on the expectation that market rents will "bounce along the bottom," according to the firm's analysis.
Rexford Industrial Realty specializes in acquiring, managing, and developing industrial properties in Southern California, a region known for its limited supply of industrial space and high demand. The REIT's portfolio primarily consists of smaller properties under 50,000 square feet, which cater to a diverse tenant base.
The Outperform rating indicates that Evercore ISI is optimistic about Rexford's performance relative to the market and other stocks within the same sector. The price target of $54.00 reflects a confidence in the stock's potential for appreciation over the next year, including the value of dividends paid to shareholders.
In other recent news, Rexford Industrial Realty has been the subject of several adjustments by analysts. Mizuho Securities has lowered its price target on the company's stock to $50 from $52, citing a forecasted decrease in net operating income (NOI) for the fiscal year 2025. Similarly, Baird has reduced its target to $49, while JPMorgan (NYSE:JPM) has set its target at $47, both maintaining a neutral rating on the company's shares.
These adjustments come as Rexford Industrial reported a robust first quarter with a 12% increase in core Funds From Operations (FFO) per share to $0.58 and an 8.5% growth in same-property NOI on a cash basis. The company also completed over $1 billion in acquisitions and 3.2 million square feet of leasing activity.
Rexford Industrial also outlined a strong leasing and transaction activity for the second quarter, executing leases totaling 1.125 million square feet and completing the purchase of two industrial properties for a combined $143 million.
These are recent developments that provide a snapshot of the company's current financial and operational performance.
InvestingPro Insights
As Evercore ISI highlights Rexford Industrial Realty's potential, real-time metrics from InvestingPro further enrich the investment perspective. Rexford (NYSE:REXR) has demonstrated a robust revenue growth, with a significant 22.02% increase over the last twelve months as of Q1 2024. This growth is complemented by a healthy gross profit margin of 77.09%, indicating efficient management of costs relative to their revenue.
Investors considering Rexford should also note the company's consistent dividend growth, with a 9.87% increase in dividends over the past year, and a current dividend yield of 3.69%. This is particularly noteworthy as it aligns with one of the InvestingPro Tips that Rexford has raised its dividend for 11 consecutive years, reflecting a reliable income stream for investors. Additionally, analysts predict the company will maintain profitability this year, which is consistent with the company's performance over the last twelve months.
For those seeking more insights, there are additional InvestingPro Tips available that delve deeper into Rexford's financial health and market position. Use coupon code UK10 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and access a broader range of tips that can guide investment decisions. For example, there are currently 7 more tips on Rexford available on InvestingPro, offering a comprehensive view of the company's strengths and potential areas of caution.
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