On Tuesday, JPMorgan (NYSE:JPM) increased its price target for Plymouth Industrial REIT (NYSE:PLYM) to $24, up from the previous target of $23, while maintaining an Underweight rating on the stock. The adjustment follows the company's second-quarter results and the recent announcement regarding the Sixth Street transaction.
The firm has updated its model to reflect the latest financial information, leading to an increase in the cash flow from operations (CFFO) estimates for Plymouth Industrial REIT. Estimates for the year 2024 have been raised from $1.85 to $1.88 per share, and for 2025 from $2.00 to $2.04 per share. Additionally, JPMorgan has introduced a new CFFO estimate of $2.17 per share for 2026.
The update comes after Plymouth management decided to only consider the cash dividends from the pending preferred stock issuance as a headwind to the company's CFFO and adjusted funds from operations (AFFO), excluding the payment-in-kind (PIK) dividend components. JPMorgan previously expressed skepticism about this accounting treatment, suggesting that it might not provide a full picture of the company's earnings.
If the PIK dividends were to be accounted for as an earnings headwind, JPMorgan's CFFO per share estimates for the years 2024 to 2026 would be approximately $1.86, $1.95, and $2.08, respectively, indicating a more conservative outlook than the one provided by Plymouth's management.
The firm's current estimates are based on the exclusion of the PIK dividends from the CFFO/AFFO calculations as indicated by Plymouth Industrial REIT's management.
In other recent news, Plymouth Industrial REIT has been making strategic moves to strengthen its financial position and expand its portfolio. They have formed a joint venture with global investment firm Sixth Street, which involved the sale of Plymouth's Chicago portfolio.
This partnership has led to a $250 million investment from Sixth Street, positioning Plymouth Industrial for future acquisitions and joint venture opportunities.
BMO Capital Markets and Truist Securities have adjusted their outlooks on Plymouth Industrial. BMO reduced its price target from $26.00 to $25.00, maintaining a Market Perform rating, citing the complexity introduced by the joint venture.
On the other hand, Truist Securities raised its price target from $26.00 to $27.00, maintaining a Buy rating, citing the potential for robust earnings growth following the partnership with Sixth Street.
Plymouth Industrial has also reported strong Q2 2024 financial results, with leverage decreasing to 6.4 times. The company expanded its market presence by acquiring a property in Memphis, increasing its total market presence to nearly 7 million square feet.
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