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On Tuesday, BofA Securities adjusted their stance on Frontview REIT Inc (NYSE:FVR), downgrading the stock from Buy to Neutral and lowering the price target to $15.00 from the previous $18.00. The revision follows Frontview’s business update on April 29th, where the company confirmed its 2025 adjusted funds from operations (AFFO) guidance. The stock, which offers a substantial 6.87% dividend yield according to InvestingPro data, has experienced a significant 31.4% decline over the past six months, currently trading at $12.51. However, BofA Securities expressed concern that Frontview may only achieve the lower end of this guidance due to a planned reduction in acquisition activities.
The firm’s analysts revised their 2025 acquisition pace estimate for Frontview down to $114 million from $176 million. This adjustment led to a decrease in their AFFO projections for the years 2025 and 2026. The new estimates are $1.21 and $1.27 per share, respectively, a drop from the previous forecasts of $1.24 and $1.34. Despite these concerns, the company maintains strong fundamentals with a healthy current ratio of 1.43 and impressive revenue growth of 24.24% over the last twelve months.
The analyst’s report highlighted an agreement with Frontview management’s disciplined approach in the absence of suitable investment opportunities. However, the analysts noted that the slower external growth rate could hinder the company’s AFFO growth in 2026. This slowdown may result in Frontview’s performance trailing behind its peers, who are currently capitalizing on a robust pipeline of net lease opportunities. For deeper insights into Frontview’s competitive position and growth prospects, InvestingPro subscribers can access exclusive analysis and additional ProTips in the comprehensive Pro Research Report.
The new price target of $15.00 is based on a 13 times multiple of the revised 2025 AFFO estimate of $1.21. BofA Securities reduced the multiple from 15 times, citing the portfolio’s decreasing weighted average tenant lease term. According to the analysts, without an increase in acquisition activity involving properties with longer average lease terms, this downward trend is expected to continue. With analyst targets ranging from $15 to $20, and the stock currently trading near InvestingPro’s Fair Value estimate, investors should closely monitor the company’s execution of its growth strategy.
In other recent news, FrontView REIT Inc. reported its fourth-quarter 2024 earnings, revealing an adjusted funds from operations (AFFO) per share of $0.33, which met the company’s guidance. The company generated $15.51 million in revenue during the quarter, although it reported a negative earnings per share (EPS) of -$0.78, indicating a net loss. Despite these earnings results, FrontView REIT is planning significant real estate acquisitions in 2025, with a target of $175 million to $200 million in purchases. The company maintained a strong occupancy rate of 98% and added $103.4 million in new assets during the quarter. Analyst feedback on the company’s performance was mixed, with some concerns about its high net debt to EBITDA ratio of 5.2x, which might limit financial flexibility. FrontView REIT has set its 2025 AFFO per share guidance between $1.20 and $1.26, aiming for a 7.5% cap rate on new acquisitions. Despite the challenges, the company remains committed to its acquisition strategy and plans to continue targeting high-traffic properties with strong tenant demand.
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