Tuesday, Deutsche Bank (ETR:DBKGn) initiated coverage on The Macerich Company (NYSE:NYSE:MAC) with a Hold rating and set a price target of $22.00. The company, currently valued at $5.1 billion, has seen its stock surge over 52% in the past six months, trading near its 52-week high of $22.27. The firm outlined The Macerich Company's "Path Forward" strategy, which aims to streamline operations, enhance the quality of its portfolio, and reduce debt to position the company for sustainable earnings growth in the coming years.
The management of The Macerich Company has been actively implementing this strategy, having issued over $600 million in equity and reduced or planned to repay $1.17 billion in debt. These actions have significantly improved the company's valuation, now standing at 14.0 times price to funds from operations (P/FFO), compared to the five-year average of 7.0 times.
According to InvestingPro analysis, the company currently trades at a P/E ratio of 60x and maintains an impressive 31-year track record of consecutive dividend payments.
Despite these improvements, Deutsche Bank suggests a cautious approach for the near term. The company still has an additional $800 million of debt to reduce and plans to spend between $175 and $200 million annually on development. The portfolio also requires lease-ups, and some debt will need to be refinanced. The analyst notes potential near-term challenges, such as tariffs and rising interest rates, that could affect progress.
Deutsche Bank anticipates that a major catalyst for The Macerich Company would be a return to positive earnings growth. However, the analyst believes this is unlikely to occur before 2026 at the earliest, justifying the decision to maintain a Hold rating at this time.
In other recent news, The Macerich Company has been in focus with several significant developments. The company has reported a 14.4% year-over-year decrease in core Funds From Operations Per Share (FFOPS) to $0.38 for the third quarter of 2024. This shortfall in non-rental income has led Goldman Sachs to revise its 2025 forecast for Macerich's FFO per share downwards by 9%.
In addition to this, Macerich has announced a public offering of 18 million shares of common stock, supplemented by existing cash, to repay a $478.0 million mortgage loan secured by its Washington Square property.
Analyst firms have also adjusted their outlooks on the company. Piper Sandler has raised the price target to $17 from $14, while maintaining an underweight rating. JPMorgan has also increased its price target from $16.00 to $22.00, but retains an underweight rating. Mizuho (NYSE:MFG) has upgraded Macerich to a neutral rating and raised its price target to $22.
These recent developments provide investors with insights into the company's strategic direction and financial health. However, actual results may differ from these forward-looking statements due to inherent risks and uncertainties.
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