Eastgroup Properties: Hold Rating Maintained Amid Balanced Growth Prospects and Economic Uncertainty

Analyst Ki Bin Kim of Truist Financial maintained a Hold rating on Eastgroup Properties (EGP – Research Report), retaining the price target of $188.00.

Ki Bin Kim has given his Hold rating due to a combination of factors surrounding Eastgroup Properties’ financial outlook and market performance. The company’s guidance for the full year funds from operations (FFO) per share remains unchanged, aligning with consensus estimates and only slightly below Truist Securities’ expectations. Eastgroup Properties also maintains its cash same-store net operating income (SSNOI) growth and occupancy levels, indicating stability in its core operations. However, the economic uncertainty that is causing longer lease deliberations and a slight reduction in development start guidance signifies potential headwinds that could affect the company’s growth trajectory.

Furthermore, while Eastgroup Properties did not present any major surprises in their financial results, their stock trades at a modest premium to their price to FFO (P/FFO), suggesting there could be a minor risk of underperformance. Adjustments such as a slight increase in general and administrative (G&A) expenses and bad debt reserves, although not indicative of specific tenant issues, contribute to a more cautious outlook. Additionally, the company’s strategy of raising accretive equity is noted as a positive, given that it trades at a lower yield than short-term debt, which could be beneficial in the long term. These nuanced updates, along with the company’s solid performance, warrant a Hold rating as the potential for both upside and downside risks appears balanced.

In another report released on April 16, Wells Fargo also maintained a Hold rating on the stock with a $179.00 price target.

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Eastgroup Properties (EGP) Company Description:

EastGroup Properties, Inc. is an equity real estate investment trust, which engages in the development, acquisition and operation of industrial properties in the United States. It operates through Industrial Properties segment. Its portfolio consists of distribution facilities in Florida, California, Texas, Arizona, and North Carolina. The company was founded in 1969 and is headquartered in Ridgeland, MS.