On Wednesday, BTIG maintained a Buy rating and a $154.00 price target on ProLogis (NYSE: NYSE:PLD), following the company's third-quarter financial results. ProLogis reported a Core Funds From Operations (FFO) per share of $1.43, which was $0.05 higher than BTIG's forecast and $0.06 above the consensus. This beat was primarily attributed to gains from foreign currency and derivatives.
The company has also increased its full-year 2024 guidance by $0.01 to $5.44 at the midpoint, suggesting a fourth-quarter FFO per share of $1.38, which is $0.03 below the consensus. The third-quarter earnings were seen as generally positive, especially as the expectations for guidance, rent growth, leasing activity, and external investment activity were perceived to be low.
BTIG highlighted the company's robust same-store lease (S/L) leasing spreads and same-store net operating income (SSNOI) growth, which stood at 67.8% and 6.2%, respectively. ProLogis achieved 50.8 million square feet of leasing activity, marking the highest in eight quarters, and raised its acquisition guidance by $750 million.
However, a decrease in development starts by $750 million to $2.0 billion indicating that the bottom of the industrial supply/demand imbalance has not yet been reached.
Despite this, the firm's increased acquisitive stance suggests management's confidence in the long-term sector outlook, prompting them to invest capital ahead of a potential rebound in fundamentals.
During the earnings call, BTIG expected further insights on customer sentiment and demand, investment queues in the strategic capital business, targeted markets or regions for acquisitions, and the status of data center developments, which have shown an above-average projected yield of 9.0%.
BTIG has stated that their estimates for ProLogis are currently under review following the earnings report.
In other recent news, ProLogis ended the third quarter with a 96.2% occupancy rate, slightly above the forecasted 96.0%.
Evercore ISI maintained its In-Line rating on ProLogis, keeping its price target steady at $128.00, while Barclays maintained its Overweight rating with a stable price target of $131.00. However, RBC Capital shifted from an "Outperform" to a "Sector Perform" rating, slightly increasing the price target to $127.00.
InvestingPro Insights
ProLogis (NYSE: PLD) continues to demonstrate financial resilience and growth potential, as evidenced by both its recent earnings report and additional data from InvestingPro. The company's market capitalization stands at an impressive $116.45 billion, underscoring its significant presence in the Industrial REITs sector.
InvestingPro data reveals that ProLogis has maintained a strong dividend profile, with a current dividend yield of 3.16% and a notable dividend growth of 10.34% over the last twelve months. This aligns with the company's robust financial performance highlighted in the earnings report. An InvestingPro Tip further emphasizes this strength, noting that ProLogis "has raised its dividend for 10 consecutive years," which should be particularly appealing to income-focused investors.
The company's P/E ratio of 40.62 suggests that investors are willing to pay a premium for ProLogis shares, possibly due to its strong market position and growth prospects. This is supported by another InvestingPro Tip indicating that ProLogis is a "prominent player in the Industrial REITs industry."
For investors seeking a deeper understanding of ProLogis's financial health and market position, InvestingPro offers 7 additional tips that could provide valuable insights for investment decisions.
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