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Tuesday, Deutsche Bank (ETR:DBKGn) began covering Rexford Industrial Realty (NYSE:REXR) by assigning the stock a Hold rating and setting a price target of $40.00. The firm's analysis highlighted Rexford's historical performance, which has outshined its Industrial REIT peers due to its strong presence in Southern California, particularly in Los Angeles.
With a market capitalization of $8.8 billion and impressive revenue growth of 18% over the last twelve months, Rexford has demonstrated strong operational execution.
According to InvestingPro, the company has maintained a remarkable 12-year consecutive dividend growth streak, currently yielding 4.36%. Despite these strengths, the analyst expressed concerns over the region's challenging demographics, marked by a slowdown in both demand and supply in the Inland Empire.
The report noted apprehensions about a potential deceleration in Rexford's fundamentals and identified risks associated with interest rates and tenant concentration. Deutsche Bank's forecast for 2025 funds from operations (FFO) per share is $2.50, slightly below the consensus estimate of $2.51.
The firm's cautious stance is further supported by the stock's significant underperformance over the last year, with InvestingPro data showing a 27.93% decline. Get access to 6 additional exclusive ProTips and comprehensive financial analysis through InvestingPro's detailed Research Report, part of their coverage of over 1,400 US stocks.
The valuation of Rexford's stock, however, suggests that investor concerns may already be reflected in its current price. Trading at 15.1 times price to FFO and a P/E ratio of 30.9x, Rexford is positioned below the group average of 17.3 times, indicating a discount.
According to InvestingPro's Fair Value analysis, the stock appears slightly undervalued at current levels. Consequently, Deutsche Bank has deemed the Hold rating to be suitable for the time being, acknowledging the stock's recent price behavior and the balance of existing risks against historical performance.
In other recent news, Rexford Industrial Realty displayed a notable 5.4% year-over-year increase in funds from operations (FFO) for the third quarter, reaching $0.59 per share. The company also elevated its full-year 2023 FFO guidance to between $2.33 and $2.35 per share, suggesting a 7% year-over-year growth. Despite a 7.5% year-over-year drop in market rents, Rexford projects $222 million in internal cash NOI growth over the next three years.
Rexford Industrial Realty has also announced new executive appointments, with Michael Fitzmaurice taking on the role of Chief Financial Officer and Laura Clark being promoted to Chief Operating Officer. In analyst news, Citi has revised its price target for Rexford Industrial Realty to $40.00, maintaining a Neutral rating.
BofA Securities downgraded the stock to Neutral and reduced the price target to $49.00, whereas Evercore ISI maintained an Outperform rating but with a revised price target of $55.00. These recent developments reflect the ongoing changes and projections within Rexford Industrial Realty.
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