On Tuesday, Goldman Sachs reiterated a Sell rating on shares of The Macerich Company (NYSE: NYSE:MAC), maintaining a price target of $16.70. The firm's analyst noted that Macerich's third-quarter 2024 core Funds From Operations Per Share (FFOPS) of $0.38 decreased by 14.4% year-over-year and fell short of Goldman Sachs' estimate by 1.3%. The lower-than-expected results were attributed to a shortfall in non-rental income.
Despite recent challenges, InvestingPro data shows the stock has delivered impressive returns, with a 69.82% gain over the past year and is currently trading near its 52-week high of $22.27.
In light of the third-quarter earnings and recent updates, Goldman Sachs has revised its 2025 forecast for Macerich's FFO per share downwards by 9%. This revision accounts for the impact of various acquisitions, dispositions, refinancing updates, and equity issuance.
Moreover, the forecast incorporates a decline in lease termination fees and other income streams, such as parking, interest income, and advertising, including a reduction in management income due to fewer joint ventures (JVs).
According to InvestingPro's comprehensive analysis, the company maintains a FAIR financial health score of 2.38, with particularly strong price momentum metrics. For deeper insights into Macerich's financial health and growth prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst projects that Macerich's FFO per share will decline further in 2025 but anticipates a slight growth in 2026. Despite these projections, Goldman Sachs commended Macerich's prompt efforts in reducing leverage throughout 2024 and streamlining their joint venture property ownership. The firm expects these efforts to persist into 2025.
Goldman Sachs expressed caution, stating that they do not yet see clear visibility for Macerich to achieve sustainable earnings and dividend growth comparable to other retail Real Estate Investment Trusts (REITs). This outlook suggests that the current valuation of Macerich does not yet align with the performance benchmarks set by its industry peers.
Notable metrics from InvestingPro indicate the stock trades at a relatively high P/E ratio of 60.33x, though the company has maintained dividend payments for 31 consecutive years. Based on InvestingPro's Fair Value analysis, the stock currently appears overvalued relative to its fundamentals.
In other recent news, The Macerich Company has been in the spotlight with several significant developments. The company has announced a public offering of 18 million shares of common stock, with an additional 2.7 million shares available to underwriters. These proceeds, supplemented by existing cash, are planned to repay a $478.0 million mortgage loan secured by Macerich's Washington Square property.
On the earnings front, Macerich has released its third quarter 2024 results, with the company's leadership team providing insights into the financial performance and strategic plans.
In analyst assessments, JPMorgan raised its price target for Macerich from $16.00 to $22.00 but maintained an Underweight rating, reflecting a cautious stance due to uncertainties in the value of mall properties. Similarly, Mizuho (NYSE:MFG) upgraded Macerich to a neutral rating and raised its price target to $22, suggesting a potentially balanced risk/reward profile for investors.
These recent developments provide valuable insights for investors and analysts into the company's strategic direction and financial health. However, it is important to note that actual results may differ from these forward-looking statements due to inherent risks and uncertainties.
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