Lineage Inc stock holds firm despite market reaction to job cuts

On Thursday, Evercore ISI maintained its In Line rating and $71.00 price target on Lineage Inc (NASDAQ:LINE), following market turmoil earlier in the week. The company's shares dipped over 3.5% after a Wall Street Journal article on Tuesday reported that Lineage was reducing its workforce.

According to InvestingPro data, the stock has fallen nearly 32% over the past six months and is currently trading near its 52-week low of $52.75. The article's lack of detail led to speculation among investors that the cuts were a response to diminishing top-line growth, which also negatively affected shares of Americold Realty Trust (NYSE:COLD), falling by more than 2.5%.

In discussions with Lineage's management, the company clarified that the job reductions were routine and not indicative of any operational downturns. Management described the event as part of normal employee turnover and did not signify any broader issues. Although the exact number of job cuts was not disclosed, the implication was that it involved only a small number of employees. InvestingPro analysis shows that while the company maintains a healthy current ratio of 1.07, two analysts have recently revised their earnings expectations downward for the upcoming period.

The recent sell-off is attributed to investor concerns ahead of the company's fourth-quarter results, which are not expected to be released until late February. With no new operational data anticipated until the Q4 report and the 2025 outlook, investors are left with uncertainties.

Evercore ISI's projections for Lineage remain conservative, with an anticipated top-line growth of 1.2% in 2025, which is 260 basis points below the consensus estimate of 3.8%. However, the firm projects a decrease in expense growth by 0.6%, more optimistic than the market's expectation of a 3.1% increase.

The forecasted net operating income (NOI) growth rate stands at 3.9%, slightly under the consensus of 4.6%. Additionally, the firm's adjusted funds from operations (AFFO) estimate of $3.49 is marginally lower than the consensus estimate of $3.55.

In other recent news, Lineage Inc has seen several adjustments to its stock price target by various financial firms. JPMorgan revised its stance on Lineage Inc, downgrading the stock from Overweight to Neutral and adjusting its price target to $75, citing concerns over the company's organic growth prospects. This followed RBC Capital Markets' reduction of its price target for Lineage to $81, despite maintaining an Outperform rating. Similarly, Baird reduced its price target for Lineage to $85, while Evercore ISI adjusted its price target for Lineage to $78.

In terms of revenue, Lineage Inc announced a fourth-quarter cash dividend of $0.5275 per share. This announcement followed Lineage's operational expansion, with the company operating over 480 facilities across North America, Europe, and Asia-Pacific. Additionally, Lineage's third-quarter adjusted funds from operations (AFFO) surpassed estimates, recording $0.90 against Evercore ISI's estimate of $0.68 and a consensus of $0.80.

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