On Tuesday, Truist Securities adjusted its outlook on Regency Centers (NASDAQ:REG) shares, a real estate investment trust specializing in shopping centers, by lowering the price target to $70 from the previous $72 while maintaining a Buy rating on the stock. This adjustment comes despite the company's strong first-quarter results and growth expectations.
Truist Securities cites a better-than-expected growth in Regency Centers' Strategic Non-Operating (SNO) pipeline as a reason for maintaining the Buy rating.
The firm has increased its 2024 NAREIT Funds From Operations (FFO) estimate slightly to $4.19 per share, up from $4.16, accounting for approximately $0.04 per share in merger charges. However, the 2025 NAREIT FFO estimate has been marginally reduced to $4.44 per share from $4.46.
The estimates provided by Truist Securities suggest a modest year-over-year increase of 0.9% in 2024, followed by a more significant 5.8% increase in 2025 on a NAREIT basis. The Core Operating FFO, which excludes non-cash and non-recurring items, remains unchanged for 2024 at $4.05 per share.
The projection for 2025 has been slightly reduced to $4.32 per share from $4.34, implying a 2.5% year-over-year increase, followed by a 6.7% increase the following year.
The revised price target of $70 is based on Truist Securities' Net Asset Value (NAV) estimate of $73.24 per share. This NAV estimate uses a forward 12-month Net Operating Income (NOI) capitalization rate of 5.8% and a five-year levered Discounted Cash Flow (DCF) of $69.07 per share. The DCF calculation employs a 9.2% discount rate and a terminal growth rate of 2.75%.
InvestingPro Insights
Regency Centers (NASDAQ:REG) has shown a commendable track record in shareholder returns, highlighted by its consistent dividend growth. An InvestingPro Tip notes the company has increased its dividend for 10 consecutive years and has maintained dividend payments for an impressive 31 consecutive years. This is a strong signal of financial stability and commitment to shareholders, which could be a deciding factor for income-focused investors.
From a financial performance standpoint, Regency Centers boasts a solid gross profit margin of 70.84% over the last twelve months as of Q1 2024, according to InvestingPro Data. This indicates the company's efficiency in maintaining profitability despite operational costs. Additionally, the company has experienced a revenue growth of 10.2% over the same period, outpacing many competitors in the retail real estate sector.
For investors seeking analytical insights, InvestingPro Tips reveal that while four analysts have revised their earnings estimates downwards for the upcoming period, the company is still predicted to be profitable this year. This juxtaposition of analyst sentiment and profitability forecasts can offer a nuanced view for potential investors. Moreover, there are many more tips available on InvestingPro, and users can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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