UBS Analyst Cuts Realty Income's Price Target by 9% Amidst Cautious Outlook

UBS's Brent Dilts lowered their price target on Realty Income (NYSE: O) by 9% from $67 to $61 on 2024/05/31. The analyst maintained their Strong Buy rating on the stock.

According to Dilts, a thorough examination of the Real Estate sector coverage area prompted the decision to reduce the price target on Realty Income. The analyst expressed caution regarding the triple net lease REIT group, predicting a scarcity of external expansion opportunities until the year 2025. This anticipated dearth of prospects is expected to put pressure on the growth of funds from operations.

Dilts further elaborated on the challenges facing the acquisition environment, stating, "Obtaining transactions at accretive cap rates has become more difficult because of the increased 10-year yield, making the acquisition environment challenging." Despite these obstacles, the analyst expressed a "constructive view" on Realty Income and Essential Properties Realty Trust, highlighting their leverage-neutral investments and accretive spreads.

The analyst rating landscape for Realty Income is overwhelmingly positive, with 100% of top-rated analysts currently rating the stock as a Strong Buy or Buy. There are no analysts who see it as a Hold, and none recommend or strongly recommend selling the stock.

Analysts have a consensus forecast that Realty Income will deliver earnings per share (EPS) of $2.18 in the upcoming year. If these predictions hold true, the next yearly EPS for Realty Income will experience a significant increase of 101.6% on a year-over-year basis.

However, Realty Income's stock performance has not been as impressive. Since the company's last quarterly report on 2024/03/31, the stock price has decreased by 1.9%. Moreover, on a year-over-year basis, the stock is down by 10.7%. During this period, Realty Income has been trailing the performance of the S&P 500, which has experienced a decline of 26.3%.

Brent Dilts, the UBS analyst responsible for the recent price target cut on Realty Income, is ranked by WallStreetZen in the top 46% of Wall Street analysts. With an average return of 2.4% and a win rate of 42.9%, Dilts specializes in the Real Estate and Financial Services sectors.

Realty Income Corporation, a Real Estate Investment Trust (REIT), manages a diverse portfolio of over 11,000 commercial properties. These properties are leased to clients operating across 60 industries, spanning all 50 U.S. states, as well as the United Kingdom and Spain. Founded in 1969, Realty Income is headquartered in San Diego, California.

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