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On Wednesday, BTIG analysts downgraded Agree Realty Corporation (NYSE:ADC) from Buy to Neutral, removing the previously set price target of $78. The stock, currently trading at $76.66 and near its 52-week high of $79.65, appears overvalued according to InvestingPro analysis. The analysts noted that Agree Realty had experienced considerable success in 2024 and 2025, which led to a substantial flight to quality amid market volatility. Consequently, the company’s relative multiple premium expanded nearly tenfold since the end of the first quarter of 2024. This success is reflected in the company’s strong financial metrics, with InvestingPro data showing a 13.65% revenue growth and an impressive 88% gross profit margin in the last twelve months.
The stock now trades at a 37% premium compared to its peer group, marking the highest multiple in the sector and exceeding the next closest by more than 1.5 times. This premium is significantly above the 16% ten-year average and approaches the all-time quarterly high of 50%. BTIG analysts pointed out that while valuation itself is not a driving factor, there is a notable negative correlation between Agree Realty’s multiple premium and its 12-month forward returns.
Despite Agree Realty reporting a strong first quarter in 2025 and significantly raising its investment guidance, this did not lead to materially better expectations for annual adjusted funds from operations (AFFO). While the analysts still recognize the strength of Agree Realty’s portfolio and its solid balance sheet, they believe these positives are already fully reflected in the current stock price. Notable strengths include a 32-year streak of maintaining dividends with a current yield of 4.01%, and a "GOOD" overall financial health score according to InvestingPro, which offers 8 additional key insights about ADC’s investment potential in its comprehensive Pro Research Report.
In other recent news, Agree Realty Corporation reported its first-quarter results for 2025, revealing an earnings per share (EPS) of $0.42, slightly below the forecast of $0.43, while revenue exceeded expectations at $169.16 million compared to the anticipated $164.17 million. The company has also raised its full-year adjusted funds from operations (AFFO) guidance, signaling confidence in its future performance. Agree Realty launched a public offering of 4.5 million shares of common stock, with a 30-day option for the underwriter to purchase an additional 675,000 shares, as part of a forward sale agreement with Bank of America, N.A. The proceeds from this offering are intended for general corporate purposes, including acquisitions and debt repayment.
JMP Securities maintained a Market Perform rating on Agree Realty, highlighting the company’s strong liquidity and low leverage as key differentiators from its competitors. The firm’s favorable cost of capital supports its aggressive investment strategy, with plans to invest $1.3 billion to $1.5 billion in 2025. Despite these positive factors, JMP Securities notes that the stock’s current valuation may already reflect these strengths, with limited potential for further multiple expansion. Agree Realty has bolstered its financial flexibility with a new commercial paper program and available credit on its revolving credit facility, bringing its total liquidity close to $3 billion.
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