On Wednesday, RBC Capital Markets adjusted its outlook on Getty Realty Corp (NYSE:GTY), reducing the real estate investment trust's price target to $32 from the previous $33.
The firm maintained its Sector Perform rating on the stock, despite acknowledging that Getty Realty's fourth-quarter 2024 investment activity exceeded expectations and the capitalization rate was notably higher than anticipated.
Analysts at RBC Capital, highlighted that Getty Realty's adjusted funds from operations (AFFO) per share guidance for 2025 aligns with the consensus at the midpoint. They pointed out that since the company's guidance does not account for future acquisitions, the underlying assumptions might be slightly more optimistic than expected. RBC Capital's estimates remain unchanged for the years 2024 and 2025, but they have been marginally reduced for 2026 due to an anticipated increase in the cost of capital.
The analysts explained that the AFFO per share estimates for the fourth quarter of 2024 and the full year of 2025 are consistent with previous projections. However, for 2026, the estimates have been lowered by $0.02, factoring in a higher assumed cost for both debt and equity.
Despite the high acquisition capitalization rate recorded in the fourth quarter of 2024, RBC Capital has chosen not to adjust its forward capitalization rate assumptions, which could have potentially increased their estimates.
The revised price target of $32 reflects a $1 decrease per share, attributed to the higher cost of capital that is now being factored into RBC Capital's valuation model for Getty Realty.
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