EPR Properties stock holds Market Perform rating as box office rebounds

Investing.com - Citizens JMP analyst reiterated a Market Perform rating on EPR Properties (NYSE:EPR), a REIT currently offering a 6.06% dividend yield, as the theater industry shows signs of recovery. InvestingPro data shows the company has maintained dividend payments for 29 consecutive years.

A second-quarter box office rebound and upcoming high-profile releases for the second half of 2025 could improve coverage metrics within EPR’s theater portfolio, potentially increasing revenue participation from its Regal properties.

After a slow start to 2025, box office sales recovered in the second quarter due to several high-profile releases exceeding expectations, contributing to EPR’s 32% share price increase this year, outperforming both the broader REIT sector (-2% MSCI REIT Index) and S&P (+5.5%).

EPR, which derives 38% of its EBITDA from movie theater exposure, should benefit from steady operating performance across its experiential portfolio in the second half of 2025 as recession risks continue to decline.

The company’s shares currently trade at a mid-11x 2025E AFFO, representing a two-turn discount to the net-lease REIT sector, which is approximately half the multiple discount seen since the pandemic but aligns with pre-pandemic averages, suggesting the current valuation is fair.

In other recent news, EPR Properties reported impressive financial results for the first quarter of 2025, surpassing analyst expectations. The company achieved earnings per share of $0.78, exceeding the forecasted $0.61, and reported revenue of $175 million, which was above the expected $142.4 million. EPR Properties also increased its 2025 Funds From Operations (FFO) guidance to a range of $5.00-$5.16 per share, reflecting confidence in ongoing growth. In terms of analyst ratings, Stifel upgraded EPR Properties from Hold to Buy, raising the price target from $52.00 to $65.00, citing improvements in the company’s share price and cost of capital. The upgrade followed a visit to EPR’s headquarters by Stifel analysts, who noted the company’s potential for external growth. Additionally, the theater industry’s improving fundamentals and anticipated percentage rent growth were highlighted as positive factors for EPR’s earnings. The company has also made new investments in experiential assets, such as Diggerland USA and private golf clubs, as part of its strategic growth initiatives.

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