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On Friday, Goldman Sachs analyst Caitlin Burrows revised the price target for The Macerich Company (NYSE:MAC) shares, reducing it to $14.40 from the previous $16.70. The firm maintained its Sell rating on the retail real estate investment trust (REIT). Currently trading at $17.59, with a market capitalization of $4.6 billion, Macerich has shown significant price volatility, according to InvestingPro data. The adjustment follows a detailed review of Macerich’s fourth-quarter earnings for 2024 and recent updates, which included plans for asset sales aimed at achieving a mid-6x net debt to EBITDA ratio by 2027. The company’s current debt-to-equity ratio stands at 1.84, with total debt of over $5 billion, highlighting the importance of these debt reduction initiatives. InvestingPro analysis reveals 8 additional key financial indicators that could impact the company’s valuation.
Macerich’s expectations for approximately flat same-store net operating income (SS NOI) growth through mid-2026 and a decreased contribution from redevelopment efforts have led Goldman Sachs to revise its model. Consequently, the firm’s annual funds from operations (FFO) estimates for the years 2025 to 2027 have been lowered by more than 10%. Goldman Sachs anticipates a 14.1% year-over-year decline in FFO per share for 2025, followed by a return to positive growth of 1.7% in 2026, marking the first increase since 2016.
Despite these challenges, the analyst recognized Macerich’s ongoing efforts to reduce debt and enhance internal systems to foster future growth. However, the firm noted that Macerich is still years away from achieving the mid-single-digit sustainable earnings and dividend growth that other retail REITs currently enjoy. Notable strengths include Macerich’s 32-year track record of maintaining dividend payments, currently yielding 3.87%, though InvestingPro’s Financial Health Score indicates overall weak fundamentals with a score of 1.71 out of 5.
The outlook for Macerich reflects a broader context within the REIT sector, where companies are continually balancing asset management and financial strategies to navigate market conditions. Macerich’s strategic approach, focusing on leverage reduction and operational improvements, is indicative of the industry’s efforts to position for long-term stability and growth.
In other recent news, The Macerich Company reported impressive fourth-quarter 2024 earnings, surpassing forecasts with an earnings per share (EPS) of $0.89 against a projected $0.03, and revenue reaching $273.68 million, exceeding the expected $221.73 million. Despite these strong results, the company’s funds from operations (FFO) decreased to $117 million from $128 million the previous year, primarily due to higher interest and severance expenses. Piper Sandler, however, maintained an Underweight rating on Macerich and reduced its price target from $17.00 to $16.00, citing cautiousness over the company’s near-term earnings prospects. Analysts acknowledged Macerich’s Path Forward Plan, which includes enhancing tenancy and selling assets, but noted that financial improvements might take several years to materialize. The company is targeting 4 million square feet of leasing activity in the next two years, aiming to reduce its leverage and generate significant revenue from outparcel and land sales. Macerich’s management is focused on restructuring operations to optimize lease outcomes and rental revenue, with a goal of achieving $1.80 in FFO by 2028. The company also plans to decrease its debt to EBITDA ratio to below 8.6x in the coming years, indicating a strategic approach to financial stability.
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