Tuesday, Mizuho (NYSE:MFG) upgraded Vornado Realty Trust (NYSE:NYSE:VNO) stock rating from Neutral to Outperform and increased the price target to $48 from $38. The upgrade comes as VNO's stock has shown remarkable momentum, delivering a 50% return over the past year and trading at $41.29. According to InvestingPro, which offers comprehensive analysis of 1,400+ stocks, VNO's current market price appears fairly valued based on their proprietary Fair Value model.
Vornado Realty Trust is expected to have a solid liquidity profile in the near future, which could allow the company to take strategic initiatives. This is supported by InvestingPro data showing a strong current ratio of 4.95x and a 35-year track record of consistent dividend payments. Additionally, the firm's Street Retail portfolio is seen as underappreciated with a positive fundamental setup. The company also has several potential catalysts on the horizon, including leasing opportunities and possible refinancing actions.
Despite the current valuation of Vornado's stock at 19 times the funds from operations (FFO) being considered high compared to historical levels, Mizuho notes that when adjusted for the stabilization of key assets in the Penn District, the multiples are effectively three times lower, making the valuation more reasonable.
The new price target of $48 implies that there is room for modest multiple appreciation based on what is considered still trough-ish earnings. Mizuho's outlook suggests a belief in Vornado's capacity to outperform market expectations and deliver value to its shareholders.
In other recent news, Vornado Realty Trust reported mixed third-quarter results, with a decrease in funds from operations (FFO) per share to $0.52, down from $0.66 in the previous year. This decline was attributed to lower net operating income due to tenant move-outs and increased interest expenses. Despite this, the company leased 2.5 million square feet year-to-date and maintains a strong liquidity position of $2.6 billion.
Vornado has also secured a significant lease with NYU for 770 Broadway, expected to contribute towards paying off a $700 million loan. The company remains optimistic about future leasing activities, particularly in Manhattan, and the recovery of the Class A office market. The PENN DISTRICT developments have been identified as major growth drivers, with high rental rates achieved at PENN 1.
In other developments, Truist Securities has raised its stock target for Vornado by 29% while maintaining a Hold rating. The firm predicts robust growth for Vornado in the near term, despite the company's current high valuation multiple within the office real estate investment trust (REIT) sector. These recent developments suggest Vornado is navigating through a transitional period, with expectations of significant earnings growth in 2026 as leases from the PENN District come online.
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