UBS sets neutral stance on Lineage stock

On Monday, UBS initiated coverage on shares of Lineage Inc (NASDAQ: LINE), giving the stock a Neutral rating and setting a price target of $88.00.

The firm's analysis suggests that the potential acceleration in Lineage's operating metrics and Adjusted Funds From Operations (AFFO) growth anticipated in 2025 is already reflected in the current stock price.

Lineage is expected to see an uptick in demand for cold storage after a period of inventory rebalancing in 2024, according to UBS. The company's physical occupancy rates are projected to climb to 90% from the 82% seen in 2023.

Additionally, supply growth is forecasted to slow down to 1.8% in 2025, a decrease from 3.9% in 2023 and 3.5% in 2024. The analyst notes that the minimal unleased speculative development for 2025, at just 10 basis points, positions Lineage favorably for growth.

The firm also acknowledges Lineage's significant investment in technology and automation, which has resulted in a Same-Store Net Operating Income (SSNOI) margin of 39%. This margin surpasses that of its competitor, Americold Realty Trust (NYSE:COLD), by 900 basis points.

However, it still lags behind pure industrial peers, such as Prologis , Inc. (NYSE:PLD), which boasts a 76% margin and trades at a premium valuation with a Next Twelve Months (NTM) AFFO multiple of 26 times.

UBS believes that Lineage's comprehensive integration into its clients' supply chains will promote stable demand. Nonetheless, with Lineage's shares currently trading at an NTM AFFO multiple of 25 times, the market appears to have already factored in the company's growth prospects and performance algorithm.

In other recent news, analysts from various firms have initiated coverage of Lineage Inc., providing fresh insights into the company's financial prospects. For instance, Wells Fargo has assigned an Equal Weight rating to Lineage with a price target of $86.00, based on the firm's analysis of the company's fiscal year 2025 and 2026 Adjusted Funds From Operations (AFFO) estimates. Meanwhile, Mizuho has started coverage on Lineage with a Neutral rating and a similar price target of $86.00, noting the company's significant scale and advanced technology utilization.

Also, Baird initiated coverage on Lineage with an Outperform rating and a 12-month price target of $91, recognizing the company's substantial investment in its operating platform. JPMorgan has also initiated coverage, giving the stock an Overweight rating and a price target of $93, with anticipation of earnings growth in 2025 and 2026 driven by an increase in Net Operating Income (NOI) and cost-saving initiatives. Goldman Sachs issued a Buy rating and a 12-month price target of $105, with similar expectations for earnings growth.

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