On Thursday, National Retail Properties (NYSE:NNN) experienced a change in its stock rating, as Jefferies analysts downgraded the company from Buy to Hold. Accompanying this adjustment was a decrease in the price target, now set at $43.00, down from the previous target of $52.00. The stock, currently trading at $40.85, maintains a robust dividend yield of 5.68% and boasts an impressive track record of raising dividends for 35 consecutive years, according to InvestingPro data.
The revision by Jefferies reflects a cautious stance towards the company's future financial performance. The analysts have reduced their forecast for Fiscal Year 2024 adjusted funds from operations per share (AFFO/sh) by $0.02 to $3.32, indicating a modest year-over-year growth of 2.0%. This estimate sits slightly below the consensus of $3.35, which projects a 2.7% growth. Despite the cautious outlook, InvestingPro analysis shows the company maintains a GREAT financial health score, with particularly strong metrics in profitability and cash flow management.
The outlook for Fiscal Year 2025 was similarly adjusted, with Jefferies' analysts decreasing their AFFO/sh estimate by $0.06 to $3.39. This represents an anticipated year-over-year growth of 1.9%, which is lower than the consensus estimate of $3.43, or a 2.3% increase. The analysts cite increased bad debt and a reduction in lease term fees as the primary drivers behind the tempered expectations.
The new price target of $43.00 implies a forward multiple of 12.7 times the firm's Fiscal Year 2025 AFFO per share estimate. This valuation is 1.5 times below the average five-year multiple of 14.2 times and is 0.6 times above the current valuation of 12.1 times. The reduction in the price target by $9 underscores the analysts' revised view of the stock's potential performance.
Based on InvestingPro's comprehensive Fair Value analysis, which considers multiple valuation metrics and growth factors, the stock appears to be trading above its Fair Value. The company currently trades at a P/E ratio of 18.84, with a market capitalization of $7.66 billion.
Investors and market watchers will closely monitor National Retail Properties' financial results and market dynamics to see how the company performs against these adjusted expectations. The company's next earnings report is scheduled for February 6, 2025, which will provide crucial insights into its performance trajectory.
In other recent news, NNN REIT has reported a strong third-quarter performance, raising its acquisition guidance midpoint by 22% to $550 million and tightening its core FFO per share outlook for 2024 to $3.28 to $3.32. The company also disclosed executive compensation changes, with an updated employment agreement for top executive Michelle L. Miller, which includes an annual base salary of $350,000, performance-based cash bonuses, and potential equity awards.
Stifel reaffirmed its Buy rating on National Retail Properties, maintaining a price target of $48.25, while Baird financial analysts adjusted their price target on shares of National Retail Properties to $45.00 from the previous target of $44.00. Both firms highlighted the company's strategic management and optimistic outlook despite challenges with certain tenants.
In terms of other company news, NNN REIT is anticipating the return of properties from Badcock to its portfolio in the fourth quarter of 2024, which is expected to contribute positively to the company’s performance. The company also raised $175 million through its ATM program, ending the quarter with a substantial cash balance and no debt maturing until late 2025.
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