Monday, shares of Rexford Industrial Realty (NYSE:REXR) saw a revision in their price target as Citi analysts adjusted their outlook for the company. The new price target is set at $40.00, down from the previous $50.00, while the firm maintains a Neutral rating on the stock. The revision comes as the stock trades near its 52-week low of $36.92, having declined over 23% in the past six months.
The adjustment follows Citi's updated forecasts for Rexford Industrial Realty, which take into account several revised assumptions. These include changes in expected occupancy rates, interest income, interest rate projections, and the timing of equity issuance. As a result, the estimated funds from operations (FFO) for the year 2025 have been reduced from $2.58 to $2.50. Despite these challenges, InvestingPro data shows the company maintains a strong dividend profile with 12 consecutive years of dividend increases and a current yield of 4.49%.
Citi's analysts have cited a "continued and more prolonged deceleration in fundamentals" as the reason for the reduced price target. They have applied a lower multiple of 17.5 times the 2025 estimated adjusted funds from operations (AFFO), reflecting the impact of the revised estimates on the company's valuation.
The statement from the analysts highlights the recalibration of expectations for Rexford Industrial Realty. "We are updating our REXR forecasts to reflect revised assumptions around occupancy, interest income, revised interest rate assumptions, and timing of equity issuance.
Accordingly, our 2025E FFO decreases from $2.58 to $2.50, and we are lowering our target price from $50 to $40 or 17.5x 2025E AFFO, reflecting a lower multiple on our lowered AFFO estimate to reflect a continued and more prolonged deceleration in fundamentals relative to prior expectations."
Investors in Rexford Industrial Realty will be monitoring the stock's performance closely in the wake of this updated analysis from Citi. The new price target of $40.00 reflects the analysts' recalibrated expectations for the company's financial performance in the coming years.
According to InvestingPro analysis, the stock appears undervalued at current levels, with additional insights and a comprehensive Pro Research Report available for subscribers looking to make informed investment decisions.
In other recent news, Rexford Industrial Realty reported a 5.4% year-over-year increase in funds from operations (FFO) for the third quarter, reaching $0.59 per share. The company also raised its full-year 2023 FFO guidance to between $2.33 and $2.35 per share, indicating a 7% year-over-year growth. Additionally, Rexford projects $222 million in internal cash NOI growth over the next three years, despite a 7.5% year-over-year drop in market rents.
On the executive front, Rexford Industrial has appointed Michael Fitzmaurice as the new Chief Financial Officer and promoted Laura Clark to Chief Operating Officer. In terms of analyst ratings, Baird reiterated a Neutral rating on Rexford Industrial shares, maintaining a $52.00 price target.
However, BofA Securities downgraded the stock from Buy to Neutral and reduced the price target to $49.00, citing a slower-than-expected demand recovery in the Los Angeles market. In contrast, Evercore ISI maintained an Outperform rating for Rexford, albeit with a reduced price target of $55.00.
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