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On Monday, RBC Capital Markets adjusted its outlook on Kilroy Realty Corporation (NYSE:KRC), reducing the price target to $39 from the previous $44 while keeping a Sector Perform rating on the stock. The adjustment follows Kilroy Realty’s latest earnings report and reflects a mix of positive and challenging factors influencing the company’s financial performance. According to InvestingPro data, KRC currently trades at $33.67, with a market capitalization of $4.02 billion and an attractive dividend yield of 6.48%. The stock has maintained dividend payments for 29 consecutive years, demonstrating strong commitment to shareholder returns.
Analysts at RBC acknowledged the increase in leasing activity for Kilroy Realty in the fourth quarter of 2024, noting the company’s optimistic commentary on emerging positive trends. Despite this, they foresee potential volatility in the firm’s funds from operations (FFO) over the next couple of years. The projection is based on several factors, including existing move-outs, a significant number of leases set to expire in 2026, and the transition of developments and land from capitalization. The company maintains a healthy current ratio of 1.83, indicating strong ability to meet short-term obligations, while trading at a modest 0.74 times book value.
Kilroy Realty’s KOP2 project was highlighted as facing stiff competition from other high-quality offerings in the market. This competitive landscape, along with the expected lease roll in 2026, contributes to the anticipation of continued earnings volatility for the company.
The revised price target of $39 per share is a response to these anticipated fluctuations in earnings. RBC’s analysis suggests that while Kilroy Realty has made strides in leasing, the broader market uncertainties and specific challenges related to its project pipeline and lease expirations warrant a cautious valuation approach.
The Sector Perform rating signifies that RBC Capital Markets expects Kilroy Realty’s stock performance to align with the general market or sector performance in the near term. This rating remains unchanged despite the lowered price target, indicating that the firm’s view on the company’s stock has not shifted fundamentally, but rather adjusted for new developments and financial forecasts.
In other recent news, Kilroy Realty Corporation reported strong financial results for the fourth quarter of 2024, with earnings per share (EPS) of $0.50, surpassing analyst expectations of $0.32. The company’s revenue also exceeded forecasts, reaching $286.4 million against an anticipated $277.97 million. In addition to these positive earnings, Kilroy Realty has declared a quarterly cash dividend of $0.54 per share, payable on April 9, 2025. Barclays (LON:BARC) analyst Anthony F. Powell upgraded Kilroy Realty’s stock rating from Equalweight to Overweight, raising the price target from $42.00 to $44.00, citing the company’s high-quality real estate portfolio at a low valuation. Kilroy Realty is also advancing several development projects, including two life science redevelopment projects and a major development project in progress. The company continues to focus on sustainability, maintaining carbon-neutral operations since 2020 and receiving recognition for its corporate social responsibility initiatives. These developments reflect Kilroy Realty’s ongoing strategic efforts to enhance its market position and financial performance.
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