On Wednesday, Mizuho Securities adjusted its outlook on The Macerich Company shares (NYSE:MAC), a real estate investment trust, by reducing the price target from $17.00 to $14.00 while keeping an Underperform rating on the stock.
The adjustment followed a significant 14% drop in Macerich's share price after the new CEO, Jackson Hsieh, discussed the company's future financial strategies during his inaugural earnings call since taking the helm on March 1, 2024.
Hsieh presented a high-level plan for the next 3-4 years aimed at reducing debt and enhancing Macerich's cost of capital and potential for long-term growth. He set forth a goal for funds from operations (FFO) per share of $1.80 and a debt-to-EBITDA ratio in the low-6 range by the third or fourth year. Notably, Macerich's policy on dividends remains unchanged at present.
The company had previously issued an initial forecast for the fiscal year 2024 FFO per share of $1.81 during its fourth-quarter 2023 earnings, but this projection was subsequently retracted. The withdrawal of the guidance suggests that achieving this level of earnings could require 3-4 years, indicating a longer timeline for recovery than initially anticipated by the company.
Macerich's strategic shift and the subsequent market reaction underscore the challenges faced by the company in its efforts to stabilize its financial position and pursue growth. The reduced price target reflects Mizuho's assessment of these factors and their impact on the company's stock performance.
InvestingPro Insights
As The Macerich Company (NYSE:MAC) navigates through its strategic shift under new CEO Jackson Hsieh, real-time data from InvestingPro provides a clearer picture of the company's current standing. With a market capitalization of $3.11 billion, Macerich's financial health is a key interest to investors.
Despite the company's challenges, an InvestingPro Tip highlights that Macerich has maintained dividend payments for 31 consecutive years, which may appeal to income-focused investors, especially with a dividend yield of 4.94% as of the latest data.
Still, with a negative P/E ratio of -11.03 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at -69.96, the company's profitability issues are apparent. The revenue growth for the last twelve months shows a slight decrease of -1.05%, but a quarterly revenue growth in Q4 2023 stands at a robust 54.29%, indicating potential signs of recovery.
The InvestingPro platform, which includes additional tips, suggests that while net income is expected to grow this year, two analysts have revised their earnings downwards for the upcoming period, signaling mixed expectations.
Investors considering Macerich's stock can leverage these insights and more on the InvestingPro platform. To access a comprehensive set of InvestingPro Tips, including those not listed here, visit https://www.investing.com/pro/MAC. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full scope of InvestingPro's analysis to make informed investment decisions.
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