ScotiaBank Analyst Raises Price Target on Realty Income, Maintains Hold Rating

ScotiaBank's Nicholas Yulico raised their price target on Realty Income (NYSE: O) by 3.7% from $54 to $56 on 2024/05/16. The analyst maintained their Hold rating on the stock.

Post Realty Income's Q1 2024 earnings report, released on 2024/05/06, Yulico said they analyzed various significant patterns and modified their estimates. U.S. REITs historical prices are low relative to the S&P SmallCap 600, the analyst told investors, and "ScotiaBank remains positive on Seniors Housing, Data Centers, and Industrial."

For Q1 2024, Realty Income reported an adjusted funds from operations (AFFO) of $1.03, which was in line with the Zacks Consensus Estimate but beat Q1 2023's $0.93 by 10.8%. The company also reported revenue of $1.26 billion, surpassing the Zacks Consensus Estimate of $1.19 billion and Q1 2023's $944.4 million by an impressive 33.5%.

Looking ahead to FY 2024, Realty Income's management maintained their guidance, which includes an AFFO range of $4.13 to $4.21. This assumes a same-store rent growth of approximately 1% and an occupancy rate of 98% or higher. Additionally, the company expects to achieve an acquisition volume of $2 billion. CEO Sumit Roy highlighted the company's strong balance sheet and ample liquidity, emphasizing their ability to self-fund growth without requiring external capital.

Realty Income prides itself on the stability of its high-quality portfolio, with Q1 2024 occupancy remaining stable at 98.6%. The company also achieved a rent recapture rate of 104.3% on re-leased properties and generated a 0.8% growth in same-store rental revenue. These factors contribute to the company's ability to generate consistent recurring cash flow and support monthly dividends that grow over time.

ScotiaBank analyst Nicholas Yulico also made adjustments to their price targets for several other companies in their portfolio. First Industrial Realty Trust Inc saw a 9.1% decrease in their price target, from $55 to $50, while Gaming & Leisure Properties Inc had a 2.1% increase from $47 to $48. Healthcare Realty Trust Inc's price target was raised by 6.7%, from $15 to $16, and Invitation Homes Inc's price target increased by 5.6% from $36 to $38. Netstreit Corp also experienced a 5.9% increase in their price target, from $17 to $18. In all cases, Yulico maintained a Hold rating on the respective stocks.

Currently, 100% of top-rated analysts rate Realty Income as a Strong Buy or Buy, with no analysts recommending a Hold or Sell. The consensus forecast among analysts is that Realty Income's upcoming year will deliver earnings per share (EPS) of $2.18. If the analysts' predictions hold true, this would represent a significant increase of 101.6% on a year-over-year basis.

Since the release of Realty Income's Q1 2024 earnings report on 2024/05/06, the stock price has experienced a 0.5% decrease. Year-over-year, the stock is down 8.5%. During this period, Realty Income has underperformed the S&P 500, which has seen a decline of 28.9%.

It's worth noting that ScotiaBank analyst Nicholas Yulico is ranked in the bottom 13% out of 4,587 Wall Street analysts by WallStreetZen. Yulico has an average return of -1.2% and a win rate of 35.5%. Their areas of specialization include the Consumer Cyclical, Real Estate, and Utilities sectors.

Realty Income Corporation, a real estate investment trust (REIT), owns and manages a diversified portfolio of over 11,000 commercial properties. The company's properties are leased to clients operating across 60 industries in all 50 U.S. states, as well as in the UK and Spain. Founded in 1969 and headquartered in San Diego, CA, Realty Income has established itself as a prominent player in the real estate market.

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