U.S. stocks steady; Cook’s dismissal, Nvidia earnings in spotlight
On Thursday, Compass Point analysts downgraded Easterly Government Properties (NYSE:DEA) from Buy to Neutral, significantly reducing the price target to $9.50 from the previous $15.00. The downgrade followed actions by the company's Board of Directors, which included a cut to the dividend and a reverse stock split. According to InvestingPro data, the stock is currently trading at $9.52, near its 52-week low of $8.81, with technical indicators suggesting oversold conditions.
Easterly Government Properties had been underperforming its dividend since downsizing its portfolio at the end of 2022. Despite this, the Board had continued to defend the dividend as a strategic move to reward shareholders for potential future value creation. However, the expected benefits of the strategy, which included the potential to raise equity capital, did not materialize, leading to persistent pressure on the stock. The company maintains a significant dividend yield of 11.13%, though financial metrics from InvestingPro show a high P/E ratio of 62.78 and modest revenue growth of 5.25% over the last twelve months.
The recent cut in the dividend, announced on April 9, 2025, after the stock reached a new 52-week low, prompted Compass Point to adjust their outlook. The firm anticipates that the 32% reduction in the dividend will likely cause a near-term decline in the stock's price. The analysts also noted that the dividend cut, along with the reverse stock split, has hurt the credibility of the management team.
The decision by Compass Point to lower the rating to Neutral reflects a more cautious stance on the company's near-term prospects. The revised price target of $9.50 represents a substantial decrease from the previous target, indicating a reassessment of the company's valuation in light of recent events and management decisions.
In other recent news, Easterly Government Properties reported its fourth-quarter 2024 earnings, revealing a net income per share of $0.05, which missed the forecasted $0.06. The company's revenue also fell short of expectations, coming in at $74.14 million compared to the anticipated $77.44 million. Despite these misses, Easterly reaffirmed its earnings outlook for 2025, projecting core funds from operations (FFO) per share between $1.18 and $1.21. In a strategic move, the company announced a reduction in its quarterly dividend and a reverse stock split, aligning its payout ratios with industry best practices. In analyst coverage, Jefferies initiated coverage of Easterly Government Properties with a Buy rating and a price target of $13.00, expressing confidence in the company's growth potential. The firm highlighted the potential for Easterly to overcome recent earnings growth challenges and re-rate its stock valuation. Additionally, Easterly plans significant acquisitions in 2025, including a $100 million investment in new assets, as part of its growth strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.