EastGroup stock rating cut at Evercore ISI, target to $185

On Monday, Evercore ISI analysts adjusted their stance on EastGroup Properties (NYSE:EGP), downgrading the stock rating from Outperform to In Line, while slightly raising the price target to $185 from $181. The revision comes despite EastGroup’s notable performance in the current year, as the company’s shares have climbed 12%, significantly outpacing the broader Real Estate Investment Trust (REIT) sector as well as the industrial segment. According to InvestingPro data, the company maintains a GREAT financial health score and commands a market capitalization of $9.35 billion.

EastGroup’s portfolio, which predominantly consists of shallow bay industrial properties, has maintained a high occupancy rate, with 97% of its spaces currently leased. The firm’s assets continue to attract solid demand, even as the market navigates through a landscape of tariff concerns. InvestingPro analysis reveals the company’s impressive track record of maintaining dividend payments for 48 consecutive years, with 13 straight years of dividend increases. The analysts acknowledged the robust leasing situation and ongoing demand for EastGroup’s properties in their commentary.

The analysts at Evercore ISI pointed out that the potential for further stock price appreciation appears limited. This assessment is based on the stock’s closing price on Friday, which stood at $180, closely approaching the newly set price target of $185. The new target suggests a modest upside, prompting the analysts to recalibrate their expectations for EastGroup’s stock performance. InvestingPro data indicates the stock trades at a P/E ratio of 38.6x and appears overvalued based on its Fair Value analysis. Discover more insights and access comprehensive valuation metrics with InvestingPro’s detailed research reports, available for over 1,400 US stocks.

The downgrade to an In Line rating reflects a shift in perspective from Evercore ISI, indicating that they now believe EastGroup Properties’ stock is expected to perform broadly in line with the average equity in the analyst’s coverage universe. This change in rating is significant for investors following Evercore ISI’s research and guidance on the company. The company maintains strong fundamentals with a 12.7% revenue growth rate and robust profitability metrics, as detailed in the comprehensive Pro Research Report available on InvestingPro.

EastGroup Properties has thus far managed to navigate the economic challenges posed by tariffs and has demonstrated resilience in its sector. The slight increase in the price target to $185, despite the downgrade, indicates a nuanced view from Evercore ISI that acknowledges the company’s strengths while also recognizing the narrowing room for growth in the stock’s value.

In other recent news, EastGroup Properties Inc . reported its fourth-quarter 2024 earnings, with earnings per share (EPS) slightly exceeding analyst expectations at $1.16 compared to the forecasted $1.15. However, the company’s revenue fell short of projections, totaling $163.77 million against the anticipated $166.42 million. Despite the revenue miss, EastGroup’s funds from operations (FFO) saw a 5.9% increase in the fourth quarter. The company maintained a strong occupancy rate, ending the year at 96.1%. Looking ahead, EastGroup has set its 2025 FFO guidance between $8.80 and $9.00 per share and plans $300 million in development starts. Additionally, strategic acquisitions totaling $150 million are on the agenda. These developments reflect EastGroup’s continued focus on growth and resilience in a challenging real estate environment.

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