On Thursday, Wells Fargo maintained its Equal Weight rating on Kimco Realty Corp (NYSE:KIM) with a steady price target of $24.00. The firm adjusted its future funds from operations (FFO) per share estimates following Kimco's recent acquisition and debt activities.
Specifically, the 2024 estimated FFO per share has been slightly increased to $1.62, which aligns with the high end of Kimco's unadjusted forecasts for the year. Estimates for 2025 and 2026 have also been raised to $1.69 and $1.73, respectively, to reflect the company's strategic financial moves.
The acquisition of Waterford Lakes Town Center in Orlando, which was announced on October 1, 2024, for $322 million, including the assumption of a $165 million mortgage, has been a significant factor in the revised estimates.
This acquisition has a cash yield in the low 7 percent range, and the shopping center boasts a 99% occupancy rate. Despite its high occupancy, the firm sees potential for tenant mix improvements in the coming years.
Kimco's proactive financial management is also reflected in its debt issuances completed in the third quarter. The company issued $500 million in 4.85% notes due in 2035 and increased its term loan facility from $500 million to $550 million in early September. These moves have provided the company with additional financial flexibility.
In addition to the acquisition, Kimco has updated its 2024 guidance for acquisitions and structured investments to a range of $565 million to $625 million, up from the previous $300 million to $350 million. Meanwhile, its disposition forecast has been lowered to $250 million to $300 million from the earlier $300 million to $350 million range. Notably, there were no transactions reported in the third quarter according to CoStar.
Wells Fargo's unchanged price target of $24 reflects the firm's view of Kimco's valuation in light of these developments. The analyst's commentary underscores the impact of Kimco's recent acquisition and financial strategies on the company's future performance metrics.
In other recent news, analyst firms have reassessed their outlook on the company. Citi maintained its Neutral rating but raised its price target for Kimco to $24.00, Mizuho downgraded Kimco to Neutral but increased its price target to $23.00, and Raymond James upgraded Kimco's stock to Strong Buy with a new price target at $25.00.
These are recent developments and actual results may vary.
InvestingPro Insights
Kimco Realty Corp's recent strategic moves align with several key metrics and trends highlighted by InvestingPro. The company's market capitalization stands at $15.63 billion, reflecting its significant presence in the real estate sector. Kimco's dividend yield of 4.14% and its track record of maintaining dividend payments for 33 consecutive years, as noted in an InvestingPro Tip, underscore its commitment to shareholder returns. This aligns with the company's recent financial maneuvers, including debt issuances and the acquisition of Waterford Lakes Town Center.
The acquisition's cash yield in the low 7 percent range and the shopping center's high occupancy rate of 99% are particularly noteworthy when considering Kimco's revenue growth. InvestingPro data shows a revenue growth of 8.11% over the last twelve months, with quarterly revenue growth in Q2 2024 reaching 12.96%. This growth trajectory supports Wells Fargo's decision to raise FFO estimates for the coming years.
InvestingPro Tips also indicate that Kimco is trading near its 52-week high and has shown strong returns over the last three months. This is corroborated by the InvestingPro data showing a 18.82% price total return over the past three months and a 32.03% return over six months. These metrics suggest that the market has responded positively to Kimco's strategic decisions and financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Kimco's financial health and market position.
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