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On Friday, Piper Sandler adjusted its financial outlook for The Macerich Company (NYSE:MAC), reducing the price target from $17.00 to $16.00 while maintaining an Underweight rating on the stock. The revision reflects a cautious stance on the company’s near-term earnings prospects despite acknowledging the real estate firm’s comprehensive strategy for improvement. According to InvestingPro data, analyst targets for MAC currently range from $16 to $25, with the stock trading at an EBIT multiple that suggests premium pricing relative to peers.
The Macerich Company’s shares tumbled approximately 9% following the announcement of earnings that suggested a further decline before an anticipated recovery. The stock has experienced a 7.57% decline over the past week, though it maintains a 15.32% gain over the past year. Analysts at Piper Sandler highlighted the company’s transparent discussion of its Path Forward Plan, which includes efforts to enhance tenancy, sell assets, and strengthen the balance sheet. These initiatives align with the analysts’ expectations shared prior to the earnings call. InvestingPro analysis reveals the company faces challenges with short-term obligations exceeding liquid assets, as reflected in a current ratio of 0.44.
The company has indicated that it will not be able to confirm adherence to its plan until mid-2026, with a target of $1.80 in funds from operations (FFO) by 2028. This timeline suggests that any material financial improvements are expected to be several years away. Despite this, Macerich is actively restructuring its operations, moving away from temporary and lagging tenants in favor of establishing more permanent and profitable leasing agreements. This strategic shift is anticipated to initially result in lower net operating income (NOI) until new sales and operations (SNO) are fully realized.
The Macerich Company’s management team is undertaking a significant overhaul, aiming for better coordination across leasing and operations. This approach is intended to ensure comprehensive awareness of each lease’s status and the associated goals. Piper Sandler expressed approval of Macerich’s strategic plans but remains cautious with the Underweight rating due to the extended timeline before the company’s efforts are expected to yield tangible results.
In other recent news, Macerich reported its fourth-quarter 2024 earnings, showcasing a significant outperformance in both earnings per share (EPS) and revenue forecasts. The company achieved an EPS of $0.89, far surpassing the anticipated $0.03, and generated revenue of $273.68 million, exceeding the expected $221.73 million. Despite these robust financial results, the stock experienced a decline, possibly due to investor apprehensions about future guidance and market conditions. Macerich is actively focusing on reducing leverage and enhancing leasing activity, aiming for 4 million square feet of leasing in 2025 and 2026. The company also plans to generate $500 million from outparcel and land sales as part of its strategic initiatives. Additionally, Macerich’s funds from operations (FFO) fell to $117 million, or $0.47 per share, down from $128 million, or $0.57 per share, in the same quarter of the previous year, primarily due to increased interest and severance expenses. Looking ahead, the company is targeting substantial leasing activity and rental revenue uplift, with expectations of a $66 million incremental rent from its signed not open pipeline. Analyst firms have not issued any specific upgrades or downgrades in this period, but the earnings call highlighted the company’s strategic focus on optimizing lease outcomes.
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