On Friday, JPMorgan updated its price target for W. P. Carey & Co. (NYSE:WPC), a global net-lease real estate investment trust (REIT), raising it to $70.00 from the previous $68.00. The firm maintained an Overweight rating on the stock.
The adjustment came as the analyst reviewed the company's model in anticipation of its third-quarter earnings report. Despite no changes to the adjusted funds from operations (AFFO) per share estimates for 2024 and 2025, JPMorgan's outlook remains conservative.
For 2024, the firm's estimate stays at $4.66, a decrease of 10.0% year-over-year and slightly below the Bloomberg consensus of $4.69. This figure also sits at the lower end of the company's guidance range of $4.63 to $4.73. Looking ahead to 2025, the estimate is set at $4.71, marking an increase of 1.1%, yet still below the Bloomberg consensus of $4.84.
JPMorgan's cautious stance stems from its conservative projections for same-store revenue growth and lower expected deal volume. The firm anticipates nearly flat same-store revenue growth in 2024 and a 1.5% increase in 2025. Additionally, the projected deal volume for 2024 is $1.21 billion, which is lower than the company's guidance of $1.25 to $1.75 billion.
Despite these conservative estimates, JPMorgan remains positive about W. P. Carey's prospects, citing the stock's attractive valuation and potential for stronger long-term internal growth. The analyst highlighted W. P. Carey's various company-specific capital sources, which could enable the company to pursue external growth opportunities accretively.
In other recent news, W. P. Carey Inc., a prominent net lease real estate investment trust, announced an increase in its quarterly cash dividend to $0.875 per share, reflecting its commitment to shareholder value. Concurrently, the company reported an adjusted funds from operations (AFFO) per share of $1.17 for the second quarter of 2024 and revised its full-year AFFO guidance to a range of $4.63 to $4.73 per share. This follows the successful sale of most properties in their Office Sale Program and the raising of over $1 million in new unsecured debt through bond issuances in both Europe and the U.S.
RBC Capital, in response to these developments, revised its outlook on W. P. Carey, lowering its price target to $62. The adjustment is attributed to unforeseen issues during the due diligence process for deals worth approximately $300 million, which has influenced the company's acquisition guidance and full-year AFFO. RBC Capital analysts project a potential reset in expectations for W. P. Carey's acquisition strategy for 2025.
Despite these challenges, W. P. Carey maintains a robust liquidity position and continues to focus on properties under long-term net leases that feature built-in rent escalations. These recent developments highlight the company's strategic focus and its commitment to transparency and reliability in financial guidance.
InvestingPro Insights
W. P. Carey's financial metrics and recent performance offer additional context to JPMorgan's analysis. According to InvestingPro data, the company boasts a market capitalization of $13.18 billion and a P/E ratio of 22.98, suggesting a moderate valuation relative to earnings. The company's impressive gross profit margin of 91.73% for the last twelve months ending Q2 2024 aligns with one of the InvestingPro Tips highlighting "impressive gross profit margins."
Despite JPMorgan's conservative outlook on same-store revenue growth, WPC has demonstrated resilience in other areas. An InvestingPro Tip notes that the company "has maintained dividend payments for 27 consecutive years," which is particularly relevant given the REIT's focus on income generation for investors. Currently, WPC offers a dividend yield of 5.74%, which may be attractive to income-seeking investors in the current market environment.
It's worth noting that while JPMorgan projects lower deal volume, an InvestingPro Tip indicates that "liquid assets exceed short-term obligations," suggesting financial flexibility that could support future growth initiatives. This financial stability could be a factor in JPMorgan's maintained Overweight rating, despite conservative growth estimates.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for W. P. Carey, providing a deeper understanding of the company's financial health and market position.
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