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On Tuesday, Citi analysts revised their outlook on Kilroy Realty Corporation (NYSE:KRC), a real estate investment trust with a market capitalization of $4.07 billion, by reducing the price target from the previous $41.00 to $35.00. The firm has maintained a Neutral rating on the stock. According to InvestingPro analysis, the company appears undervalued at current levels, with strong financial metrics including a healthy current ratio of 1.83. This adjustment follows Kilroy Realty’s fourth-quarter earnings release, which prompted Citi to update its financial model for the company to reflect new operational, financing, and transactional assumptions. Notably, InvestingPro data shows the company has maintained dividend payments for 29 consecutive years, currently offering an attractive 6.29% dividend yield.
The revised model indicates a decrease in forecasted funds from operations per share (FFOps) for the years ahead. Specifically, the estimated FFOps for 2025 has been adjusted down to $3.98 from the prior forecast of $4.16. Similarly, the 2026 FFOps projection has been lowered to $4.05 from the previous estimate of $4.21. These changes reflect a more conservative outlook on Kilroy Realty’s financial performance in the coming years. Trading at just 0.76 times book value, the stock presents interesting value metrics for investors. Discover more detailed valuation insights and 12+ additional ProTips with InvestingPro.
Citi’s valuation of Kilroy Realty employs a dual approach, combining net asset value (NAV) analysis with a comparison of relative earnings multiples. The newly set target price of $35 represents a discount to the current spot NAV and corresponds to approximately an 11 times multiple of the projected 2025 funds available for distribution per share (FADps).
The rationale behind the updated price target and the sustained Neutral rating is rooted in the aforementioned adjustments to the company’s operating, financing, and transactional expectations. Citi views the discounted target price as justified, considering the factors that have influenced the revised projections for Kilroy Realty’s financial metrics. Despite these adjustments, the company maintains strong fundamentals, with liquid assets exceeding short-term obligations and a track record of profitability over the last twelve months.
In other recent news, Kilroy Realty Corporation reported strong financial results for the fourth quarter of 2024, surpassing analyst expectations with an earnings per share (EPS) of $0.50, significantly beating the forecasted $0.32. Revenue also exceeded expectations, totaling $286.4 million against a forecast of $277.97 million. Barclays (LON:BARC) upgraded Kilroy Realty’s stock from Equalweight to Overweight, raising the price target from $42.00 to $44.00, reflecting a more optimistic outlook on the company’s financial performance and market position. Meanwhile, RBC Capital Markets adjusted its outlook, lowering the price target to $39 from the previous $44 while maintaining a Sector Perform rating, indicating potential earnings volatility due to lease expirations and market competition. Jefferies assigned a Hold rating to Kilroy Realty, setting a price target of $34.00, citing challenges in occupancy rates and leasing activity. Additionally, Kilroy Realty declared a regular quarterly cash dividend of $0.54 per share, scheduled for payment on April 9, 2025, highlighting its commitment to shareholder returns. The company is also progressing with several development projects and remains focused on sustainability and corporate social responsibility, achieving carbon-neutral operations since 2020.
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