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On Friday, Truist Securities adjusted its financial outlook for Broadstone Net Lease (NYSE:BNL) shares, increasing the real estate investment trust's price target from $16.00 to $18.00, while keeping a Hold rating on the stock. The adjustment comes as the firm revises its adjusted funds from operations (AFFO) estimates for the upcoming years.
The firm now expects Broadstone's 2024 AFFO to be $1.43 per share, a slight increase from the previous estimate of $1.42 per share. However, the 2025 AFFO estimate has been reduced to $1.46 per share from the former forecast of $1.48 per share. The changes in projections are attributed to a greater focus on development spending over acquisitions, which impacts the timing of earnings contributions.
For the year 2024, Broadstone is anticipated to make $340 million in acquisitions with a 7.4% yield, sell $40 million in dispositions at a 7.9% yield, and complete $205 million in development with a 7.2% yield. The company is expected to avoid equity issuance and utilize revolver debt financing.
The 2025 outlook includes $250 million in acquisitions at the same 7.4% yield, $170 million in dispositions with a 7.7% yield, and the procurement of a $460 million term loan at a fixed/hedged rate of 4.7%, again without issuing equity.
The stock price target increase to $18 is supported by Truist's net asset value (NAV) per share estimate of $19.68, which uses a 6.8% capitalization rate, and a discounted cash flow (DCF) value of $18.06, based on a 10.9% discount rate and a 1.8% terminal growth rate. These financial metrics are crucial for evaluating the company's performance and guiding investment decisions.
In other recent news, Broadstone Net Lease, Inc. unveiled changes in its executive leadership. Timothy D. Dieffenbacher, the company's Senior Vice President, Chief Accounting Officer, and Treasurer, has resigned, with Jennie O’Brien set to succeed him in these roles. This transition is part of the company's internal executive realignment.
Broadstone Net Lease also reported a robust second-quarter performance, maintaining its full-year adjusted funds from operations (AFFO) guidance. The company is strategically reducing healthcare portfolio exposure and focusing on industrial and quick-service restaurant (QSR) build-to-suit investments. It aims to reduce healthcare exposure to about 11% of total annual base rent by the end of 2024.
The company has an investment pipeline of approximately $408.6 million and generated an AFFO of $70 million, or $0.36 per share. These are recent developments that highlight Broadstone Net Lease's strategic shifts and strong financial performance.
InvestingPro Insights
As Broadstone Net Lease (NYSE:BNL) navigates through its strategic financial planning, real-time data from InvestingPro helps paint a more comprehensive picture of the company's current market position. With a market capitalization of $3.44 billion and a robust gross profit margin of 94.68% in the last twelve months as of Q2 2024, Broadstone's financial health appears solid. This is further supported by the company's ability to cover its short-term obligations, as its liquid assets exceed these liabilities.
InvestingPro Tips highlight that Broadstone has not only been profitable over the last twelve months but also has an impressive history of raising its dividend for four consecutive years, which may appeal to income-focused investors. Moreover, the company is trading near its 52-week high, with its price at 96.24% of that peak, indicating strong market confidence. Analysts predict Broadstone will continue to be profitable this year, aligning with Truist Securities' positive outlook on the company's adjusted funds from operations.
For investors seeking further insights, there are additional InvestingPro Tips available on the platform, offering a deeper dive into Broadstone's financial nuances. These tips can help investors understand the company's performance dynamics and potential investment opportunities.
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