On Wednesday, RBC Capital Markets adjusted its price target for Safehold Inc. (NYSE: NYSE:SAFE) shares, a real estate company specializing in ground leases, to $29 from the previous target of $32, while keeping an Outperform rating on the stock.
The revision follows Safehold's first-quarter 2024 results, which were deemed better than expected, despite the absence of new originations during the quarter.
The company's performance in the first quarter was highlighted as a positive outcome in the context of a challenging macroeconomic and interest rate environment. RBC Capital sees potential for a gradual recovery in origination volumes for Safehold as the market adjusts to current economic conditions.
Furthermore, RBC Capital expressed optimism about the long-term growth prospects for Safehold due to the emerging nature of the ground lease market. The analyst believes that this sector offers an opportunity for secular growth, which could lead to long-term benefits for the company's shareholders.
In addition to the growth prospects, RBC Capital noted that there is significant potential value in Safehold's Caret units that is not yet reflected in the company's share price. However, the timeline for these units to gain public liquidity may be extended, according to the analyst's view.
Despite the reduction in the price target, the firm's outlook for Safehold remains positive, as indicated by the maintained Outperform rating. The adjustment in the price target to $29 is described as a fine-tuning in response to the company's recent performance and the prevailing economic backdrop.
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