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Investing.com - Goldman Sachs downgraded Kilroy Realty (NYSE:KRC) from Neutral to Sell on Thursday, setting a price target of $33.00. The real estate investment trust, currently valued at $4.67 billion, has maintained dividend payments for 29 consecutive years and offers a 5.55% dividend yield.
The investment bank cited concerns about Kilroy’s future growth prospects, forecasting average annual FFO (funds from operations) per share decline of 7.0% over the next three years. Goldman Sachs updated its model following Kilroy’s second-quarter 2025 earnings, adjusting its 2025/2026/2027 estimates by +5.2%, -0.7%, and -7.2% respectively. According to InvestingPro data, the stock trades at a P/E ratio of 21.08, which appears high relative to its near-term earnings growth potential.
Goldman Sachs expects Kilroy’s same-store net operating income growth will be constrained by low retention rates among office tenants and high availability of office space in the company’s West Coast markets. These conditions reduce tenant urgency to sign leases and diminish Kilroy’s pricing power.
The firm also highlighted that capitalized interest will create significant headwinds for Kilroy in 2026, as recent development projects will require more time to generate meaningful net operating income.
Given these factors, Goldman Sachs anticipates Kilroy’s valuation multiple could contract from current levels, leading to share price underperformance in the coming periods.
In other recent news, Kilroy Realty Corp reported its Q2 2025 earnings, significantly surpassing analyst expectations. The company achieved an earnings per share (EPS) of $0.57, well above the forecasted $0.32, resulting in a 78.13% surprise. Additionally, Kilroy Realty’s revenue outperformed projections, reaching $289.9 million compared to the expected $270.28 million, marking a 7.26% surprise. These results highlight the company’s strong financial performance in the recent quarter. The positive earnings announcement has drawn attention from investors and analysts. While the article does not provide specific analyst upgrades or downgrades, the earnings beat may influence future analyst recommendations. These developments are part of the ongoing financial updates from Kilroy Realty.
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