Evercore ISI lifts Paramount Group stock rating, sees 48% upside

On Tuesday, Evercore ISI analyst Steve Sakwa upgraded Paramount Group (NYSE:PGRE) stock rating from In Line to Outperform, setting a new price target of $8.00, a significant rise from the previous $4.50 target. Currently trading at $5.41 with a market capitalization of $1.29 billion, the stock has shown remarkable momentum with a 19.43% gain in the past week. Sakwa’s analysis is rooted in a meticulous asset-by-asset net asset value (NAV) calculation for the company. The conservative estimate of the NAV is $8.03, with a potential high of $12.75 and a midpoint of $10.26.

Sakwa noted that although an outright sale of the company could present risks and take years to stabilize the portfolio, the upside potential is substantial. This perspective follows a detailed evaluation that includes relative valuation and discounted cash flow (DCF) approaches, factoring in the current depressed adjusted funds from operations (AFFO) income stream. The new price target represents a 48% potential gain, building on the stock’s 13.2% increase on Monday. According to InvestingPro, the company maintains a strong liquidity position with a current ratio of 8.7, while trading at an attractive Price/Book ratio of 0.42.

The analyst acknowledges the risk involved if the board’s strategic review does not lead to a resolution, which could result in the stock falling below its preannouncement level of $4.78. Despite this, Sakwa believes the potential rewards outweigh the risks at a 3:1 ratio, justifying the upgrade to Outperform due to the board’s active search for strategic alternatives. InvestingPro analysis reveals several additional insights, with 8 more ProTips available to subscribers, including crucial metrics about the company’s financial health, which currently stands at FAIR with a score of 2.19 out of 5.

Sakwa also reminds investors that Paramount Group previously rejected a buyout offer at $12 per share in early 2022. There remains a possibility that the company may decide not to accept an offer, which would likely not be the preferred outcome for shareholders. Nonetheless, the current stance of the board indicates a willingness to consider significant changes that may enhance shareholder value. For a comprehensive analysis of PGRE’s valuation and future prospects, investors can access the detailed Pro Research Report available on InvestingPro, which includes expert insights and advanced metrics for over 1,400 US stocks.

In other recent news, Paramount Group announced its first-quarter 2025 financial results, reporting core funds from operations (FFO) of $0.17 per share, which exceeded analyst expectations by $0.01. The company also recorded revenue of $187.02 million, surpassing the projected $178.53 million. However, the earnings per share (EPS) was reported at -$0.05, which met the expectations. In a strategic move, Paramount Group has formed a committee to explore strategic options with the assistance of Bank of America, following the departure of CFO & COO Wilbur Paes and General Counsel Gage Johnson. Evercore ISI maintained its In Line rating for Paramount Group stock, with a price target of $4.50. The company has been experiencing challenges with tenant losses in New York and San Francisco, although leasing activity in New York showed improvement. Paramount Group’s board decision to review strategic alternatives is seen as a proactive measure, with analysts suggesting it might offer short-term support for the stock. The internal promotions and strategic review indicate a new phase of leadership and potential growth for the company.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.