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On Monday, Lucid (NASDAQ:LCID) Capital Markets initiated coverage of Netstreit Corp. (NYSE: NTST) with a Buy rating and a price target set at $18.00. The firm’s analyst cited the company’s diversified portfolio and the potential for investors to acquire shares at a significant discount as key reasons for the positive outlook. According to InvestingPro data, NTST currently trades at $15.02 with a price-to-book ratio of 0.93, supporting the discount thesis.
Netstreit Corp., which manages around 690 single-tenant net lease retail properties across the United States, covering over 12.6 million square feet, also holds a relatively small mortgage loan portfolio. With a strong current ratio of 5.91 and revenue growth of 23.41% in the last twelve months, the company shows solid operational performance. Lucid Capital Markets highlighted the opportunity for investors to purchase Netstreit stock at a roughly 25% discount to the firm’s estimated net asset value (NAV), noting that this is in contrast to sector peers that are trading at a premium to NAV. InvestingPro analysis reveals additional insights about the company’s financial health and growth potential, with multiple ProTips available for subscribers.
The analyst from Lucid Capital Markets pointed out that Netstreit offers a higher dividend yield and stronger tenant credit quality compared to many of its competitors with similar assets. Indeed, InvestingPro data shows the company maintains an attractive dividend yield of 5.59%. This, combined with the company’s potential for market capitalization growth from its current $1.23 billion, could lead to a higher valuation multiple over time. Subscribers to InvestingPro can access the comprehensive Pro Research Report for deeper insights into NTST’s valuation metrics and growth prospects.
The $18 price target set by Lucid Capital Markets reflects 91% of the estimated NAV for Netstreit, which is favorable when compared to the average trading at 101% of NAV among its peer group of single-tenant net lease real estate investment trusts (REITs). Additionally, the price target is based on 14 times the firm’s estimated adjusted funds from operations (AFFO) for 2025, which aligns with the peer group’s average multiple.
In other recent news, Netstreit Corp reported its fourth quarter 2024 financial results, revealing a mixed performance. The company posted earnings per share (EPS) of -$0.07, missing the expected $0.05, while revenue came in at $44.1 million, surpassing the forecasted $40.94 million. Despite the EPS shortfall, the company recorded a net loss of $5.4 million, and its stock experienced a post-earnings rise. Netstreit also achieved a record $195 million in gross investments during the quarter. Analysts from Scotiabank (TSX:BNS) and UBS engaged with the company on strategic investment approaches and tenant exposure, highlighting the firm’s focus on risk-adjusted returns. Looking ahead, Netstreit anticipates 2025 adjusted funds from operations (AFFO) per share to be between $1.27 and $1.30. The company plans to maintain a quarterly dividend of $0.21 per share, reflecting a stable payout ratio. Netstreit’s strategic investments and strong revenue performance seem to have bolstered investor confidence despite the earnings miss.
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