On Monday, Americold Realty Trust (NYSE:COLD) stock received an upgrade in its rating from Wolfe Research. The firm shifted its stance from 'Peerperform' to 'Outperform', accompanied by a new price target of $31.00. This change reflects the analyst's anticipation of a significant total return, which includes a projected dividend yield.
The revision in rating and price target is based on several factors that Wolfe Research believes will drive Americold Realty's growth. The firm sees a clear path for volume recovery and expects that the company's development projects will contribute to higher-than-average growth through the year 2025. The analyst's price target suggests an approximate 26% total return by the end of the year, which factors in a nearly 1.7% dividend yield.
Wolfe Research's new price target of $31.00 for Americold Realty Trust signifies a roughly 20% premium over the analyst's coverage universe based on the expected multiples for the year 2025. The target is set under the assumption that Americold will trade at a 19x multiple, which is notably below the historical average of around 26x.
The upgrade to 'Outperform' indicates Wolfe Research's confidence in Americold Realty Trust's ability to outperform its peers in the market. The firm's analysis suggests that the company is currently undervalued, offering an attractive investment opportunity at its current valuation.
Americold Realty Trust specializes in temperature-controlled warehousing and logistics for the food industry, a sector that Wolfe Research seems to believe has potential for significant growth in the coming years. The firm's price target adjustment and rating upgrade signal a positive outlook for the company's financial performance and stock value.
In other recent news, Global Net Lease (NYSE:GNL), Inc. has successfully sold a portfolio of nine cold storage properties for $170 million, as part of its disposition strategy to optimize its portfolio and financial standing.
The proceeds from the sale are planned for debt reduction, aligning the company's debt to EBITDA ratio more closely with industry peers. In parallel, Americold Realty Trust has been making significant strides in its operational efficiency, leading to an improved growth outlook.
This development led JPMorgan (NYSE:JPM) to upgrade Americold's stock from Neutral to Overweight, reflecting confidence in the company's promising earnings trajectory for 2024 and 2025.
Americold started 2024 strongly, reporting a 28% year-over-year increase in its Adjusted Funds From Operations (AFFO) per share, reaching $104.9 million or $0.37 per share. The company also raised its full-year 2024 AFFO per share guidance to between $1.38 and $1.46, indicating a 12% increase from the previous year.
Despite challenges in Europe, Americold maintains a strong pipeline of new business and is advancing strategic partnerships with new projects in Kansas City, Dubai, and an expansion in Sydney, Australia.
InvestingPro Insights
Following Wolfe Research's optimistic outlook on Americold Realty Trust (NYSE:COLD), current data from InvestingPro reinforces the narrative of a potential turnaround. The company's market capitalization stands at $7.25 billion, indicating its substantial presence in the market. Notably, Americold's revenue for the last twelve months as of Q1 2024 reached approximately $2.66 billion, despite a slight downward trend of -7.76%. The company's gross profit margin remains healthy at 28.99%, reflecting its ability to maintain profitability on its core operations.
Two InvestingPro Tips highlight important aspects of Americold's current financial status. Analysts predict the company will be profitable this year, aligning with the expectation of net income growth. This is particularly noteworthy considering Americold has not been profitable over the last twelve months. Additionally, the company is recognized as a significant player in the Industrial REITs industry, which may underpin its potential for future growth.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips that delve deeper into Americold's financial health and industry standing. Interested readers can take advantage of a special offer using the coupon code uk10 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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