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On Monday, Raymond (NSE:RYMD) James analyst Buck Horne raised the stock rating of Centerspace (NYSE:CSR) from Market Perform to Outperform and set a new price target of $66.00. With the stock currently trading at $57.75 and a market capitalization of $1.02 billion, Horne highlighted a significant valuation gap for Centerspace compared to its multifamily peers, which he believes has emerged due to recent market volatility. According to InvestingPro data, analyst targets range from $67 to $79, suggesting potential upside from current levels.
Centerspace shares are currently trading at roughly 14 times the estimated 2025 Adjusted Funds From Operations (AFFO) and at a 25% Net Asset Value (NAV) discount. The company maintains a notable 5.33% dividend yield and has maintained dividend payments for 29 consecutive years, as highlighted by InvestingPro. Despite the market’s recent fluctuations, Horne pointed out that Centerspace’s markets have shown signs of improvement into early April. Unlock comprehensive valuation metrics and 12+ additional ProTips with an InvestingPro subscription. Industry data providers have reported near-record apartment demand in the first quarter of 2025, and a stabilization in rental pricing, particularly in Denver, which accounts for approximately 23% of Centerspace’s Net Operating Income (NOI).
Additionally, rent pricing in the Midwest, where Centerspace has a significant presence, is accelerating. Minneapolis, making up about 32% of Centerspace’s NOI, has seen a year-over-year asking rent growth of 1.6% as of April. The city’s rent growth rate is one of the strongest Horne tracks, indicating robust market conditions for Centerspace.
Horne’s analysis suggests that Centerspace is trading at a five times turn discount to large-cap multifamily peers on estimated 2025 AFFO (14x versus 19x). This places the company more than one standard deviation below its long-term average valuation, with an implied economic cap rate of 7.0%. The upgrade and new price target reflect Horne’s positive outlook on Centerspace’s financial performance and market position. Access the complete Pro Research Report, along with comprehensive analysis of 1,400+ US stocks, through an InvestingPro subscription.
In other recent news, Centerspace reported a fourth-quarter 2024 loss with earnings per share of -$0.31, missing analysts’ expectations of -$0.15. The company’s revenue for the quarter was $65.7 million, slightly below the forecast of $65.86 million. Despite the earnings miss, Centerspace raised its quarterly dividend to $0.77 per share, and its stock price saw an increase in after-hours trading. BMO Capital Markets upgraded Centerspace’s stock rating from Market Perform to Outperform, setting a new price target of $77.00, citing the company’s undervaluation compared to its peers. The firm also noted potential benefits for Centerspace from mergers and acquisitions activity within the multifamily sector. Additionally, Centerspace announced the upcoming retirement of Jeff Caira from its Board of Trustees in May 2025, marking a change in its board composition. Piper Sandler provided a positive outlook for the housing market, predicting that landlords will gain pricing power due to a drop in apartment starts, which could benefit companies like Centerspace.
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