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On Thursday, Citi analysts downgraded Federal Realty Investment Trust (NYSE:FRT) stock rating from Buy to Neutral and slashed the price target to $106 from the previous $135. The change in stance comes as the firm acknowledges that while Federal Realty’s core business strengths have played out as expected, broader economic factors are now posing significant challenges. According to InvestingPro data, FRT currently trades near its 52-week high of $127.69, with a market capitalization of $13.2 billion. The stock appears overvalued based on InvestingPro’s Fair Value analysis.
The initial upgrade of Federal Realty stock to Buy on September 12, 2024, was based on several positive indicators. These included limited new market supply and sustained demand in the company’s operating regions, which led to continued net absorption of the portfolio at favorable cash rent spreads. This was further bolstered by the incremental lease-up at the Santana West office development.
Federal Realty’s high-quality asset portfolio, located in higher-income areas, faced relatively smaller tenant credit issues, even amid recent retailer bankruptcies. The company’s flexible balance sheet and advantageous conditions at certain properties also facilitated the initiation of higher-yielding residential redevelopment projects, such as the one in Hoboken.
Despite these positive developments, Federal Realty’s stock has not performed as well as its open-air retail peers or the broader Real Estate Investment Trust (REIT) sector. The underperformance is attributed to a combination of macroeconomic headwinds and company-specific issues, which have overshadowed the fundamental tailwinds that had previously supported the stock’s upgrade. Analyst consensus from InvestingPro shows mixed sentiment, with price targets ranging from $115 to $148. Investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of FRT’s valuation, financial health, and growth prospects among 1,400+ top US stocks.
In other recent news, Camden Property (NYSE:CPT) Trust reported its fourth-quarter 2024 earnings, revealing a slight miss on earnings per share (EPS) at $0.37 compared to the anticipated $0.41. However, the company’s revenue slightly exceeded forecasts, coming in at $386.32 million against an expected $384.24 million. In terms of market analysis, Jefferies analyst Linda Tsai upgraded Camden’s stock rating from Hold to Buy, raising the price target to $139, citing the company’s strong presence in Sunbelt markets. Meanwhile, RBC Capital Markets increased the price target for Camden to $123, maintaining a Sector Perform rating, while noting the company’s reduced operating expenses and stable leasing spreads.
Camden’s fourth-quarter performance showed resilience with core funds from operations (FFO) of $190.4 million, or $1.73 per share. The company also reported a full-year same-store revenue growth of 1.3% and net operating income (NOI) growth of 1.1%. Analyst Brad Heffern from RBC Capital observed varied projections for Camden, with a slight decrease in the forecast for 2025 but an increase anticipated for 2026. Camden has set a 2025 core FFO guidance range of $6.60 to $6.90 per share and plans to target $750 million in acquisitions and dispositions.
The company’s strategic focus includes development starts valued between $175 million and $675 million, with anticipated development yields around 6%. Camden’s exposure to the District of Columbia and Sunbelt markets has been highlighted as a positive factor, given the anticipated moderation in supply growth in key markets like Charlotte and Atlanta. Camden’s recent construction projects and acquisitions, including the completion of Camden Durham and Camden Longmeadow Farms, indicate ongoing expansion and market repositioning efforts.
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