Wednesday, Maxim (NASDAQ:MXIM) Group adjusted its stance on Generation Income Properties Inc. (NASDAQ:GIPR) stock, upgrading from Hold to Buy and setting a price target of $5.00. This decision follows GIPR's report last week, which disclosed a 4Q23 core Adjusted Funds From Operations (AFFO) of $0.31 per share.
This figure marks a significant increase from the third quarter of 2023, where the company reported a core AFFO of ($0.01) per share, and surpasses the analyst's projection of $0.07 per share.
The upgrade was prompted by the company's financial performance after its substantial acquisition in August 2023. In the first quarter of 2024, Generation Income Properties redeemed preferred stock that was distributed as part of the acquisition deal for approximately 2.8 million shares of its common stock.
When the fourth quarter core FFO is divided by the updated share count, the proforma core FFO per share amounts to $0.14, which is notably higher than the company's quarterly dividend of $0.117. This equates to an annual yield of 12.6%.
Maxim Group has consequently revised its 2024 core FFO estimate for GIPR upward, from $0.28 to $0.61 per share. The proforma core FFO estimate for 2024 is now $0.56 per share, derived from multiplying the $0.14 proforma core FFO by four. The new $5.00 price target reflects a 2024 estimated price to proforma core FFO multiple of 8.9 times, which represents a discount compared to the average multiples of net lease peers.
The firm's rationale for the upgrade to Buy is based on the coverage of the dividend by earnings and the potential for a 47% total return. The analyst emphasized the significance of the proforma core FFO surpassing the quarterly dividend, which supports the company's dividend distribution and offers an attractive yield to investors.
InvestingPro Insights
Following the Maxim Group's recent upgrade of Generation Income Properties Inc. (GIPR), InvestingPro data and insights offer additional context for investors considering this stock. With a market capitalization of $20.11 million and a substantial revenue growth of 18.7% over the last twelve months as of Q3 2023, GIPR shows promising sales dynamics. Moreover, the company's gross profit margin stands at a robust 75.88%, highlighting efficient operations and cost management.
InvestingPro Tips suggest that while analysts are expecting sales growth this year, they are not anticipating profitability within the same timeframe. This could be a point of consideration for investors looking at the long-term earning potential of GIPR. Additionally, GIPR pays a significant dividend with a yield of 12.32% as of the latest data, which may attract income-focused investors.
For those looking to delve deeper into GIPR's financials and future prospects, InvestingPro offers further tips and insights. There are additional InvestingPro Tips available, which can be accessed through the InvestingPro platform. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover a more comprehensive analysis that could inform your investment decisions.
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