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On Friday, Goldman Sachs analyst Caitlin Burrows upgraded Tanger Factory Outlet Centers (NYSE:SKT) from Neutral to Buy, adjusting the price target slightly upwards to $40.00 from the previous $39.00. The upgrade reflects a positive outlook on the company’s financial performance, with Goldman Sachs indicating a belief in the sustainability of Tanger’s earnings growth. The company, currently valued at $3.86 billion, has demonstrated strong financial health, earning a "GREAT" rating according to InvestingPro metrics, with impressive revenue growth of 13.7% over the last twelve months.
Burrows’ commentary highlighted that trailing twelve-month (TTM) estimate revisions for Tanger have been positive, citing a 4.0% increase in the 2025 funds from operations (FFO) forecast. The analyst attributed this optimism to sustained higher same-store net operating income (SS NOI) and successful acquisitions. Based on these factors, Goldman Sachs has updated its model for Tanger, showing increased confidence in the company’s continued performance. Notably, InvestingPro data reveals that Tanger has maintained dividend payments for 33 consecutive years, with a current dividend yield of 3.35%.
The revised estimates from Goldman Sachs show a 0.3% and 1.8% increase in FFO for 2025 and 2026, respectively, compared to the FactSet consensus. Furthermore, the firm anticipates an annual FFO growth rate of 6.5% for each of the years 2025, 2026, and 2027. This projection is based on the current trading multiples, with Tanger’s stock trading at 14.2 times next twelve-month (NTM) FFO. According to InvestingPro’s Fair Value analysis, the stock appears to be trading above its Fair Value, with a P/E ratio of 36.7x and a price-to-book ratio of 5.9x.
The report also noted Tanger’s current valuation, which is at a 19% discount compared to the broader real estate investment trust (REIT) sector. Goldman Sachs expects this gap to narrow as Tanger demonstrates the ability to maintain its earnings growth trajectory. The upgrade and the new price target reflect a positive stance on the company’s financial health and its prospects in the REIT market. For deeper insights into Tanger’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro.
In other recent news, Tanger Inc. has received a positive outlook from S&P Global Ratings, reflecting the company’s strong operating performance and commitment to maintaining low leverage. S&P Global Ratings affirmed Tanger’s credit ratings at ’BBB-’, noting the company’s improved debt to EBITDA ratio, which stood at 4.8x as of December 31, 2024, down from 5.7x the previous year. The company’s portfolio was reported to be 98% occupied at the end of 2024, supported by a diverse tenant base and healthy retail fundamentals. However, S&P Global Ratings cautioned that high interest rates and an uncertain economic environment could pressure Tanger’s occupancy and rent growth.
In another development, BMO Capital Markets initiated coverage on Tanger’s shares with a "Market Perform" rating and set a price target of $36.00. BMO Capital acknowledged Tanger’s position as a major player in the outlet center market and praised its well-structured balance sheet and management team. The firm highlighted Tanger’s strategy to increase foot traffic by refreshing its tenancy and expanding into adjacent open-air centers. While optimistic about Tanger’s potential for above-average growth, BMO Capital noted a preference for retail spaces with higher-quality demographics and necessity-based tenancy. The "Market Perform" rating suggests that Tanger’s stock may align with broader market performance in the near term, pending successful execution of its leasing strategies.
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