UBS reiterates Buy rating on ProLogis stock with $120 price target

Investing.com - UBS has reiterated its Buy rating and $120.00 price target on ProLogis (NYSE:PLD), a prominent player in the Industrial REITs industry with a market capitalization of $102.92 billion, according to a research note released Monday. InvestingPro data shows the stock currently trading at $108.83, with a healthy dividend yield of 3.7%.

UBS analyst Michael Goldsmith’s predictive model forecasts U.S. industrial warehouse market rent growth of 1.0% in 2025 and 0.1% in 2026, showing a significant slowdown from 2024’s 3.8% growth rate reported by CoStar. With a strong gross profit margin of 76.26% and an overall Financial Health Score rated as GOOD by InvestingPro, ProLogis appears well-positioned to navigate this market transition.

The model, which uses CoStar Industrial warehouse data, analyzes historical and forecasted annual net absorption, vacancy levels, and net deliveries to predict market rent trends, with net absorption showing a strong positive correlation (R=0.88) with market rent growth.

The analysis found that vacancy rates have historically demonstrated a strong negative relationship with market rent growth (R=-0.95), while deliveries show a positive correlation (R=0.60).

UBS created bull, base, and bear case scenarios for industrial demand, with the base case indicating that industrial rent growth will remain "subdued for the next 1.5 years" due to softening market conditions around supply deliveries and stabilizing demand.

In other recent news, ProLogis reported its first-quarter 2025 earnings, slightly missing earnings per share (EPS) expectations with an actual EPS of $0.63 compared to a forecast of $0.64. However, the company exceeded revenue expectations, reporting $2.14 billion against the anticipated $1.96 billion. The company’s core Funds From Operations (FFO) for the quarter was $1.42, surpassing both Evercore ISI’s estimate of $1.37 and the consensus of $1.38. Despite this, Evercore ISI revised ProLogis’ stock price target down to $106 due to lower estimates and increased capitalization rates. UBS maintained a Buy rating with a $106 target, citing the resilience of ProLogis’ business model, especially given the 53.7% net effective rent growth reported for the quarter. In other developments, ProLogis appointed Sarah Slusser, CEO of Cypress Creek Renewables, to its board of directors, reflecting the company’s commitment to integrating energy innovation. Mizuho (NYSE:MFG) raised its price target for ProLogis to $109, maintaining a Neutral rating, based on a positive outlook for occupancy and ancillary business segments. These developments highlight ProLogis’ strategic focus amid global economic uncertainties and its continued operational strength.

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