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On Monday, JPMorgan initiated coverage on Lineage Inc (NASDAQ: LINE) stock, the largest global owner and operator of temperature-controlled warehouses. The firm set a price target of $93.00 and gave the stock an Overweight rating.
Lineage's portfolio boasts over 480 properties across 19 countries, with approximately 3 billion cubic feet of storage capacity. The company holds a significant market share, with about 33% in North America and 12% globally.
According to JPMorgan, Lineage operates as a logistics business with a real estate component, structured within a Real Estate Investment Trust (REIT). Despite the current challenges in the cold storage industry, which are expected to result in flat same-store net operating income (SS NOI) growth for 2024, the analyst anticipates a rebound leading to stronger performance in 2025 and 2026. This outlook is based on the normalization of throughput volume and occupancy rates.
The company's management is actively investing in technology, which is seen as a key element for long-term growth. Since 2019, Lineage has demonstrated a robust acquisition strategy, which JPMorgan suggests could present further potential upside beyond the current forecasts.
JPMorgan's analysis points to Lineage's strong initial equity valuation as a strategic advantage that could fuel future acquisition activities. The firm's coverage initiation and the setting of the $93.00 price target reflect confidence in the company's growth trajectory and market position.
In other recent news, Goldman Sachs also initiated coverage on Lineage Inc, a real estate investment trust, with a Buy rating and a 12-month price target of $105.00.
The firm's bullish stance is driven by projected earnings growth for Lineage just like JPMorgan, expected to be fueled by an increase in Net Operating Income (NOI) and cost-saving initiatives in labor and power. Goldman Sachs anticipates this growth to occur in 2025 and 2026, following a slower year in 2024.
In other developments, Lineage Inc has recently repaid a senior unsecured term loan facility of approximately $2.4 billion using proceeds from its initial public offering (IPO). This significant financial move, along with the repayment of the ICE5 CMBS Loan, is seen as a strategic step in reshaping the company's capital structure.
Furthermore, Lineage Inc plans to use a portion of the IPO net proceeds to reduce the borrowings under its Revolving Credit Facility, demonstrating its commitment to maintaining a strong balance sheet. These are among the recent developments that investors should be aware of.
InvestingPro Insights
As Lineage Inc (NASDAQ: LINE) garners attention with JPMorgan's Overweight rating and a $93.00 price target, it's valuable to consider additional insights from InvestingPro. Despite not being profitable in the last twelve months, Lineage is recognized as a prominent player in the Industrial REITs industry. The company's strategic investments in technology and a robust acquisition strategy have positioned it for potential growth. Reflecting on its market valuation, Lineage has an adjusted market cap of $21.17 billion and trades at a high Price / Book multiple of 4.25 as of Q1 2024. While the company's revenue growth showed a slight quarterly decline of 0.55%, its gross profit margin remains strong at 32.79%.
InvestingPro Tips highlight that Lineage is trading near its 52-week high, with the price at 93.47% of this peak. Additionally, the company does not pay a dividend to shareholders, which could be a consideration for income-focused investors. For those interested in a deeper dive, InvestingPro offers more tips on the company's performance and prospects, which can be found at https://www.investing.com/pro/LINE.
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