Stifel cuts Essential Properties stock target to $36.50, keeps buy rating

On Wednesday, Stifel analysts adjusted their outlook on Essential Properties Realty Trust (NYSE:EPRT) by reducing the price target slightly to $36.50 from the previous $36.75. Despite this change, they maintained a Buy rating on the company’s stock. According to InvestingPro data, the company maintains a "GREAT" overall financial health score, with particularly strong cash flow metrics. The adjustment followed Essential Properties’ announcement of a recent equity offering.

Essential Properties, on Tuesday, priced an offering of 8.2 million shares, which could expand to 9.43 million shares with the underwriters’ option, known as the shoe. The shares were offered at $31.00 each, aiming to raise gross proceeds of approximately $254.2 million, or potentially up to $292.3 million if the underwriters’ option is fully exercised. The company has demonstrated strong financial performance, with revenue growing by 25% in the last twelve months and maintaining an impressive 98.8% gross profit margin.

The company plans to utilize the funds from this offering to further its growth strategy. Specifically, Essential Properties intends to use the proceeds for future acquisitions and to repay the $155 million outstanding balance on its line of credit, which was reported at the end of February. InvestingPro analysis shows the company maintains a healthy current ratio of 2.62, indicating strong liquidity to meet its short-term obligations. The company has also consistently raised its dividend for seven consecutive years, demonstrating commitment to shareholder returns.

The pricing of the equity offering at $31.00 per share represents a strategic move by Essential Properties to secure capital for its intended purposes. This offering is expected to provide the financial flexibility needed to support the company’s acquisition goals and improve its financial position by reducing debt.

Stifel’s continued Buy rating indicates their positive outlook on Essential Properties despite the slight decrease in the price target. The new price target of $36.50 suggests that Stifel analysts still see potential for the stock’s value to grow beyond its current levels and the price at which the new shares were offered.

In other recent news, Essential Properties Realty Trust has announced an underwritten public offering of 8 million shares on a forward sale basis, with Wells Fargo (NYSE:WFC) Securities and BofA Securities as underwriters. The company plans to settle these agreements within approximately 18 months and will use the proceeds for general corporate purposes. S&P Global Ratings has revised the company’s outlook to positive, citing robust growth and strong credit metrics. The company’s investment volume reached $1.2 billion in 2024, expanding its asset base significantly. Citi analysts have increased the stock target to $35, maintaining a Buy rating, reflecting confidence in the company’s projected earnings. Conversely, B.Riley downgraded the stock rating to Neutral, citing valuation concerns despite Essential Properties’ strong growth profile. The downgrade also noted that capitalization rates have been converging with industry averages. Essential Properties has not publicly responded to the downgrade and price target adjustment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.