In a report released yesterday, Camille Bonnel from Bank of America Securities maintained a Sell rating on Stag Industrial (STAG – Research Report), with a price target of $34.00.
Camille Bonnel has given his Sell rating due to a combination of factors that suggest Stag Industrial’s stock performance may not meet market expectations going forward. Despite the company beating first-quarter Funds From Operations (FFO) per share estimates, Bonnel anticipates these tailwinds to moderate throughout the year as comparable periods become more challenging. The analyst points out that while cash Same Store Net Operating Income (SS NOI) grew, this growth is primarily attributed to temporary factors like free rent that are expected to lessen over time. Moreover, the maintained guidance for 2024, although in line with the Street’s expectations, does not fully reflect the company’s current trajectory of core operating metrics.
Another concern raised by Bonnel is the company’s valuation, which seems to be fully priced in, considering the stock’s current market performance. The leasing activity, while robust in terms of cash and GAAP leasing spreads, is expected to face moderation and is tracking slightly below previous quarters’ trends. Additionally, the report suggests that the acquisitions, though picking up, are forecasted to be weighted towards the second half of the year. The company’s leverage has remained stable, and progress has been made in addressing debt maturities, yet these aspects do not seem sufficient to warrant a more positive outlook. Consequently, these financial considerations have led to the recommendation to sell the stock at the current price point.
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Stag Industrial (STAG) Company Description:
STAG Industrial, Inc. is a real estate investment trust, which focuses on acquisition, ownership and operation of single-tenant, industrial properties throughout the United States. The company was founded by Benjamin S. Butcher on July 21, 2010 and is headquartered in Boston, MA.
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