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Investing.com - Morgan Stanley (NYSE:MS) downgraded Lineage Inc (NASDAQ:LINE) from Overweight to Equalweight on Monday, while reducing its price target to $50.00 from $75.00. According to InvestingPro data, analyst targets for the $10.2 billion company currently range from $42 to $84, with the stock trading at $44.76.
The downgrade follows Lineage’s steep 43.3% stock decline over the trailing twelve months, compared to a 4% gain for the broader REIT sector. Morgan Stanley cited three key factors behind the underperformance: decelerating same-store net operating income due to softer demand, no signs of improvement in the second quarter, and risks to the company’s second-half recovery and guidance. The company’s $5.3 billion in revenue faces headwinds, with InvestingPro analysis showing negative revenue growth of 0.61% in the last twelve months.
Cold storage inventory data remained below expectations in May, potentially creating additional headwinds for the temperature-controlled warehouse operator. The firm also noted that potential tariffs could further impact demand, with approximately 15% of Lineage’s throughput volumes tied to imports and exports.
Morgan Stanley’s decision to downgrade was based on five specific concerns: limited visibility on demand inflection, operating de-leverage, potential risk to guidance, mixed external growth prospects, and the company’s ongoing CFO transition.
From a valuation perspective, the firm believes Lineage now looks fairly priced on an adjusted funds from operations (AFFO) multiple basis, though slightly cheap based on discounted cash flow analysis with a range of 3-6% stage 2 growth. InvestingPro analysis reveals the company is currently trading at a low revenue multiple but maintains a high EBIT valuation multiple, with additional metrics and insights available in the comprehensive Pro Research Report.
In other recent news, Lineage Inc. announced a quarterly cash dividend of $0.5275 per share for the second quarter of 2025, payable on July 21, 2025, to shareholders of record as of June 30, 2025. The company also priced $500 million in senior unsecured notes at a 5.25% interest rate, with proceeds intended to repay outstanding amounts under its revolving credit facility and for general corporate purposes. Additionally, Lineage’s Chief Financial Officer, Rob Crisci, has announced plans to retire, with the company actively searching for his successor. In analyst updates, JPMorgan downgraded Lineage’s stock from Neutral to Underweight due to challenges in the cold storage business, including lower throughput volumes and pricing pressures. The firm also noted that its 2025 AFFO/share estimate is below the low end of management’s guidance. Furthermore, Lineage reaffirmed its 2025 financial guidance, stating that its performance aligns with projected outlooks ahead of its participation in Nareit’s REITweek 2025 Investor Conference. The company continues to focus on enhancing supply chain efficiency and sustainability across its extensive network of temperature-controlled warehouses.
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