On Monday, Citi updated its stance on Veris Residential (NYSE: VRE), raising the real estate investment trust's price target to $17.75 from the previous $15.50, while keeping a Neutral rating on the stock. Currently trading at $17.67, VRE is near its 52-week high of $18.85, with analyst targets ranging from $14 to $26. The adjustment follows a review of the company's third-quarter earnings results, insights from Nareit commentary, and revised operating, financing, and interest rate expectations. According to InvestingPro analysis, the stock appears overvalued at current levels.
The analyst at Citi noted that the new price target is based on a more optimistic outlook for the company's future earnings. Specifically, the core funds from operations (FFO) estimate for 2024 has been increased to $0.61 per share, up from the earlier estimate of $0.58. For 2025, the core FFO per share estimate has been lifted to $0.65 from $0.60. InvestingPro data shows the company has achieved 12% revenue growth in the last twelve months, though it currently faces challenges with short-term obligations exceeding liquid assets.
The revised target price of $17.75 reflects a 27 times multiple on the estimated earnings for 2025. This price target suggests a specific valuation metric that Citi applies to Veris Residential based on its anticipated earnings performance.
Citi's updated model incorporates the latest available data and projections for Veris Residential's performance. The new target price indicates an expectation of growth and a reassessment of the company's potential in light of recent financial results and industry conditions.
The maintenance of the Neutral rating alongside the price target increase suggests that while Citi sees improved prospects for Veris Residential, it advises caution, reflecting a balanced view on the stock's current valuation and future prospects.
In other recent news, Veris Residential declared a Q4 cash dividend of $0.08 per share, with payment scheduled for early 2025. The dividend is contingent on the approval of the Board of Directors, who will consider factors such as the company's adjusted funds from operations (AFFO) and actual cash flow. Veris Residential also reported robust Q3 performance, with core Funds From Operations (FFO) per share increasing by 42% to $0.17, leading to an upward revision of its full-year core FFO guidance to between $0.59 and $0.60 per share.
Additionally, Veris Residential successfully refinanced $308 million in mortgages, extending debt maturities to 2026, and maintained high occupancy rates of 95.1%. The company has also started a renovation project at Liberty Towers, expecting a mid to high teens return on invested capital. In a recent development, BofA Securities upgraded Veris Residential's stock rating from Neutral to Buy, lifting its price target from $20.00 to $23.00. The firm also adjusted its forecasts for the company's future FFO, projecting an increase in the coming years.
These recent developments underscore Veris Residential's resilience and strategic positioning in the market. BofA Securities' upgrade and increased price target reflect confidence in the company's growth trajectory and its ability to successfully carry out its optimization initiatives. The firm's endorsement places Veris Residential's FFO estimates at the high end of analyst expectations, indicating a more bullish outlook on the company's financial prospects compared to the consensus.
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