On Wednesday, RBC Capital adjusted its outlook on Americold Realty Trust (NYSE:COLD), reducing the price target to $30 from the previous $33 while maintaining an Outperform rating on the stock. The move comes after a reassessment of the company's performance following the third quarter of 2024, acknowledging the challenges faced by Americold in the current operating environment.
The firm noted that Americold is dealing with a difficult near-term operating landscape, with customers being cautious about managing their supply chains. This has led to a revision of the Adjusted Funds From Operations (AFFO) estimates, anticipating a slower seasonal build. Consequently, the price target has been adjusted to $30 per share.
Despite the near-term hurdles, RBC Capital remains optimistic about Americold's prospects. The firm highlighted that management has successfully expanded service margins, which is a positive sign. This operational success contributes to the decision to maintain the Outperform rating for the company's stock.
RBC Capital projected that growth for Americold is likely to pick up pace once the industry moves towards restocking its inventories, targeting the second half of 2025 for this anticipated acceleration. The Outperform rating reflects the firm's confidence in Americold's potential for growth despite the current industry-wide challenges.
In other recent news, Americold Realty Trust reported robust growth in its Q3 2024 earnings call. The company revealed an 11% increase in Adjusted Funds From Operations (AFFO) and same-store Net Operating Income (NOI), with AFFO reaching approximately $100 million, or $0.35 per share.
Americold also announced plans for a $148 million automated expansion in Dallas-Fort Worth and exceeded its development start guidance for 2024, totaling $305 million.
The company's Project Orion technology contributed an incremental $100 million in NOI year-to-date. Management expects a recovery in occupancy by the second half of 2024 and ongoing development projects are on track, with new business opportunities exceeding $200 million. However, occupancy rates are projected to decline due to soft consumer demand.
Americold's CEO George Chappelle, President Rob Chambers, and CFO Jay Wells provided updated financial guidance for the year, maintaining the AFFO per share guidance at $1.44 to $1.50. The company also improved its GRESB score of 81, ranking first in its peer group for sustainability.
These are the latest developments in Americold's ongoing projects and strategic expansion plans.
InvestingPro Insights
Recent InvestingPro data adds context to RBC Capital's analysis of Americold Realty Trust (NYSE:COLD). The company's market capitalization stands at $6.45 billion, reflecting its significant presence in the Industrial REITs sector. Despite RBC's optimism, Americold faces some headwinds, as evidenced by its revenue growth of -1.35% over the last twelve months as of Q3 2024, aligning with the cautious customer behavior noted in the article.
However, there are positive signals. An InvestingPro Tip indicates that net income is expected to grow this year, which could support RBC's Outperform rating. Additionally, with a dividend yield of 3.88%, Americold may appeal to income-focused investors during this challenging period.
The stock's recent performance has been challenging, with a 20.35% decline over the past three months, possibly reflecting the near-term operating difficulties mentioned by RBC. This downturn has brought Americold's price to 73.42% of its 52-week high, potentially presenting a value opportunity for investors who share RBC's long-term optimism.
For readers interested in a deeper analysis, InvestingPro offers 10 additional tips for Americold Realty Trust, providing a more comprehensive view of the company's financial health and market position.
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