On Thursday, Truist Securities adjusted its outlook on Easterly Government Properties (NYSE:DEA), a real estate investment trust specializing in properties leased to U.S. government agencies.
With the stock currently trading at $11.77 and showing oversold conditions according to InvestingPro analysis, the firm's analyst has reduced the price target on the company's shares to $13.00, down from the previous $14.00, while maintaining a Hold rating. The company maintains a FAIR financial health score.
The adjustment comes as the analyst makes mqinor changes to their financial model for Easterly Government Properties. Despite the reduction in the price target, the analyst's new figure still indicates a potential total return of 18%, factoring in an 8.92% dividend yield, which InvestingPro data shows has averaged 7% over the past five years. This yield is expected to closely match the company's cash flow for 2025.
Easterly Government Properties, with a market capitalization of $1.39 billion and a defensive beta of 0.66, has experienced a decline in its stock value, falling 11% since election day, in contrast to a 1% increase for the Vanguard Real Estate ETF (VNQ), which tracks the performance of the real estate sector of the U.S. stock market. The analyst's decision to maintain the Hold rating reflects a cautious stance, with a focus on awaiting further information.
The specifics of the new Department of Government Efficiency (DOGE) and its potential impact on Easterly Government Properties is a key piece of information that the firm is monitoring.
The implications of DOGE's policies on the company's operations could be significant, and as such, the analyst has opted for a watchful approach, pending more clarity on the matter. For deeper insights into DEA's financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Easterly Government Properties reported robust Q3 2024 results, with $139.5 million in property acquisitions and core Funds From Operations (FFO) per share growth to $0.30. The company maintains its 2024 core FFO guidance at $1.15 to $1.17 per share, projecting a 2025 guidance range of $1.17 to $1.21. The company plans to lower the payout ratio below 100% by the end of 2026, a commitment outlined by CFO Allison Marino.
Easterly Government Properties completed $139.5 million in acquisitions in 2024 and anticipates $90 million more by the end of 2023. Furthermore, it is evaluating a $1.5 billion acquisition pipeline with expected cap rates above the cost of capital. The company is targeting 15% of the portfolio in government-adjacent properties.
CEO Darrell Crate emphasized the company's strategic focus on mission-critical assets and disciplined acquisition strategy. The company projects 2% to 3% core FFO growth year-over-year. In addition, the company is confident in maintaining leverage within the 6.5% to 7.5% range, reflecting its strong creditworthiness.
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