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On Monday, Goldman Sachs initiated coverage on Lineage Inc (NASDAQ:LINE) stock, a real estate investment trust specializing in cold storage, with a Buy rating and a 12-month price target of $105.00.
The firm anticipates that Lineage will experience earnings growth driven by an uptick in same store Net Operating Income (NOI) as demand increases and normal seasonal patterns resume in the years 2025 and 2026. This growth is expected after a comparatively slower year in 2024, which faces challenging comparisons with 2023.
The optimistic outlook for Lineage Inc is further supported by the company's cost-saving initiatives, particularly in labor and power, which are expected to contribute to the earnings growth.
Goldman Sachs' financial model for Lineage does not include the potential impact of additional acquisitions or new development starts, despite the company's historical pattern of expansion through these means.
Goldman Sachs' analysis suggests that while the timing and scale of potential acquisitions or developments by Lineage are uncertain, there is a possibility for a roll-up opportunity. Such a strategy could provide additional upside to the firm's projections over time.
The roll-up strategy refers to the process of consolidating smaller companies in the same industry, which can lead to increased market share and efficiency gains.
The coverage initiation and price target are based on the firm's expectation of Lineage's performance and do not assume any further strategic moves by the company. The $105 price target represents a significant level of confidence in the company's future prospects and its ability to capitalize on market opportunities in the coming years.
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