Inventrust Properties stock boosted to Buy as FFO estimates increase by 1.1%

On Thursday, BofA Securities raised its rating on shares of InvenTrust Properties Corp. (NYSE:IVT), moving from Neutral to Buy and increasing the price target to $33.00, up from the previous $30.00. The upgrade was based on a favorable valuation perspective.

The decision to adjust the stock's status comes with an optimistic view of the company's financial future. BofA Securities anticipates a 1.1% increase in the firm's 2025 funds from operations (FFO) estimates, which overshadows the consensus. The more positive outlook is attributed to several factors, including the expectation that InvenTrust will amplify its external capital deployment.

BofA Securities also notes the robust fundamentals and resilient consumer base of Sunbelt grocery-anchored retail as reasons for the upgrade. Additionally, the firm recognizes the increasing institutional capital formation around quality grocery-anchored assets, which is seen as a positive sign for InvenTrust's growth.

The analyst foresees a continued compression of capitalization rates for necessity retail, which should benefit InvenTrust. The recent equity offering by InvenTrust is interpreted as a sign of the company's readiness to embrace external growth opportunities.

BofA Securities expects InvenTrust to effectively fund accretive acquisitions, particularly targeting defensive, high-quality grocery-anchored shopping centers that align with the company's strategic growth plans.

In other recent news, InvenTrust Properties Corp. has made significant strides in its financial growth and expansion. The company raised approximately $246.3 million in a public offering of its common stock, issuing and selling 9.2 million shares.

This offering was conducted under an underwriting agreement with J.P. Morgan Securities LLC, BofA Securities, Inc., and Wells Fargo Securities, LLC. The funds raised will be utilized for general corporate purposes such as acquiring additional properties, repaying existing debt, and providing working capital.

InvenTrust Properties also announced a public offering of 6.5 million shares of common stock, with an additional 30-day option for underwriters to purchase up to 975,000 more shares. The net proceeds from this offering are expected to be allocated for similar corporate purposes, including potential property acquisitions and debt repayment.

On the earnings front, InvenTrust reported robust results for the second quarter, primarily driven by operations in the US Sunbelt region. The company recorded a record high leased occupancy of 96.4% and successfully acquired McGuire Groves in Orlando. Furthermore, InvenTrust raised its full-year guidance for same-property net operating income growth and funds from operations, projecting a positive outlook for 2024.

InvestingPro Insights

InvestingPro data and tips offer additional context to BofA Securities' upgrade of InvenTrust Properties Corp. (NYSE:IVT). The company's market cap stands at $2.2 billion, with a notable dividend yield of 3.17% as of the most recent data. This aligns with one of the InvestingPro Tips, which highlights that IVT has raised its dividend for 6 consecutive years, potentially appealing to income-focused investors.

The company's revenue growth of 14.12% over the last twelve months and EBITDA growth of 27.85% in the same period support BofA's optimistic view on IVT's financial future. These growth metrics, combined with a strong gross profit margin of 73.34%, underscore the company's operational efficiency in the Sunbelt grocery-anchored retail sector.

However, investors should note that IVT is trading at a high earnings multiple, with a P/E ratio of 68.79 (adjusted for the last twelve months as of Q2 2024). This valuation metric suggests that the market has high growth expectations for the company, which aligns with BofA's upgraded price target.

InvestingPro Tips also indicate that IVT is trading near its 52-week high and has shown a strong return over the last three months, which corroborates with the stock's 17.78% price total return over the past quarter. These factors may have contributed to BofA's decision to upgrade the stock from Neutral to Buy.

For readers interested in a more comprehensive analysis, InvestingPro offers 9 additional tips for IVT, providing a deeper understanding of the company's financial health and market position.

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