On Friday, Truist Securities adjusted its outlook on Plymouth Industrial REIT (NYSE:PLYM), reducing the price target to $22 from the previous $27, while maintaining a Buy rating on the stock. Currently trading at $18.82, PLYM has experienced a challenging year with a -19.19% year-to-date return.
According to InvestingPro analysis, the stock is trading at a high earnings multiple, though it maintains a notable 5.1% dividend yield. The revision follows the announcement of two evictions in Cleveland, which has led the analyst to lower the 2024 normalized Funds From Operations (FFO) estimate to $1.83 per share, down from $1.90 per share.
This new estimate sits at the low end of the company's own forecasted range of $1.83 to $1.85 per share for 2024. InvestingPro data reveals that the company's financial health score is currently rated as 'FAIR', with additional insights available in the comprehensive Pro Research Report covering this $863.45M market cap REIT.
The firm also revised its 2025 normalized FFO estimate to $1.91 per share from $2.09 per share. The updated model for 2025 includes assumptions such as $430 million in acquisitions with a 6.6% initial yield, the lease-up of properties at 2100 International and 1350 Moore in the first half of 2025, and the lease-up of the St. Louis box in the third quarter of 2025. Additionally, the model anticipates the move-out of Accredo Health, Inc., which is currently leasing 158,803 square feet of space in Memphis, at the end of 2024.
The new 12-month price target of $22 is primarily driven by the anticipated move-outs and extended vacancies. This target is based on a discounted cash flow estimate of $27.21 (one-third weighting), a 20% assumed discount to the projected Net Asset Value (NAV) a year from now (one-third), and 10 times the next twelve months' FFO per share (one-third).
At present, Plymouth Industrial REIT's stock is trading at an 18% discount to Truist Securities' NAV estimate, which is slightly below the 20% average discount to consensus NAV observed over the past three years. The stock also trades at 10 times the estimated FFO for 2025. Broader analyst consensus from InvestingPro shows price targets ranging from $22 to $27, with additional proprietary valuation metrics and 6 key ProTips available to subscribers.
In other recent news, Plymouth Industrial REIT has completed a significant asset disposition, transferring 34 properties to Isosceles JV, LLC, in a deal valued at $357.9 million. This strategic move is part of the company's portfolio management and capital recycling efforts. The financial implications of this transaction have been outlined in Plymouth Industrial REIT's recent SEC filing.
Simultaneously, the company has announced a strategic partnership with Sixth Street, which provides $500 million for acquisitions and expands its borrowing capacity to $1.5 billion. Despite a 2.7% vacancy rate, Plymouth Industrial REIT continues to focus on capital deployment and leasing opportunities.
An upcoming acquisition in Cincinnati, valued at approximately $40 million, is expected to conclude by the end of the year. Furthermore, Plymouth Industrial REIT has over 11 million square feet of acquisition opportunities, amounting to over $1 billion, in its pipeline.
In terms of financial guidance, the company's fourth-quarter FFO is projected to be between 47 to 48 cents, with a one-time $500,000 cleanup fee impacting Q4 financials. A Baird analyst recently revised the stock price target for Plymouth Industrial REIT, reducing it to $25.00 from the previous $26.00, while maintaining an Outperform rating.
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