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Investing.com - KeyBanc has reiterated its Overweight rating and $10.00 price target on Lexington Realty Trust (NYSE:LXP), citing the company’s defensive growth potential and attractive valuation. According to InvestingPro data, LXP currently trades at $8.44, with analysts’ targets ranging from $10.00 to $12.00, suggesting potential upside. The company maintains a "FAIR" overall financial health score.
The firm views LXP as a compelling opportunity within the Industrial REIT subsector due to several factors, including potential for outsized growth from leasing up approximately 2.6 million square feet of vacant space, which could contribute $0.08 per share to FFO growth. The company’s strong financial position is evidenced by its current ratio of 1.54, indicating liquid assets exceed short-term obligations - one of several key metrics available in the comprehensive InvestingPro Research Report.
KeyBanc highlighted LXP’s relatively longer lease duration of approximately 9.5 years compared to peers, providing protection to cash flows during a period of moderating rent growth and sluggish new lease activity nationally.
The firm noted LXP’s non-coastal portfolio is predominantly situated in high-growth markets that should benefit from reshoring activity, outsized investment, and job growth, while trading at an attractive valuation with a 7.5% implied cap rate and 37% discount to the Industrial REIT subsector based on 2025 AFFO multiples.
LXP’s 6.4% dividend yield compares favorably to average dividend yields of 3.9% for Industrial REITs, 4.1% for the REIT weighted average, and the 4.4% 10-year Treasury yield, according to KeyBanc’s analysis. InvestingPro data reveals the company has maintained dividend payments for 32 consecutive years and has raised its dividend for 5 consecutive years, demonstrating strong commitment to shareholder returns.
In other recent news, LXP Industrial Trust reported better-than-expected earnings for the first quarter of 2025, with earnings per share at $0.06, surpassing the anticipated loss of $0.01. The company also exceeded revenue expectations, reporting $87.89 million compared to the forecast of $78.85 million, indicating strong operational execution. KeyBanc Capital Markets maintained an Overweight rating on Lexington Realty Trust, highlighting a significant lease agreement for a 1.1 million square foot facility in South Carolina, expected to generate $6.7 million in annual income. This lease features a higher-than-expected cash yield, which could mitigate risks to earnings forecasts for 2025. Meanwhile, JMP Securities retained a Market Perform rating on Lexington Realty Trust, noting the successful leasing of a major development project but also pointing out ongoing challenges with unoccupied developments. Analysts from both KeyBanc and JMP Securities see potential growth opportunities in Lexington Realty’s focus on newer assets and strategic market positioning. The company’s portfolio, concentrated in the Sunbelt and Midwest, is expected to benefit from trends like manufacturing reshoring. These recent developments reflect LXP Industrial Trust’s strategic focus and operational resilience in a dynamic market environment.
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