On Thursday, Jefferies analysts upgraded The Macerich Company (NYSE:MAC) stock rating from Hold to Buy and raised the price target to $23.00 from the previous $19.00. The upgrade reflects a positive outlook on the company's future performance, with expectations of continued consumer spending strength and increased mall foot traffic benefiting Macerich.
According to InvestingPro data, the company, currently valued at $5.09 billion, has maintained dividend payments for an impressive 31 consecutive years, demonstrating consistent shareholder returns despite market volatility.
The analysts' optimism is based on several key indicators. Retail sales have seen a year-to-date (YTD) increase of 2.5%, and mall foot traffic has also risen by 1.0% YTD. These trends are anticipated to persist into the next year, suggesting a robust environment for malls to leverage improved pricing power.
Macerich's strategic initiatives have also contributed to the upgraded rating. The company has been actively pursuing its Path Forward Plan, which aims to streamline operations through asset consolidation. Furthermore, Macerich has been working on deleveraging its balance sheet, highlighted by the PPRT portfolio buyout and an accretive debt for equity swap. This swap implies a capitalization rate of approximately 7.2% compared to the interest rate on debt of around 9.2%, a move that Jefferies believes justifies an expansion of the company's multiple.
The stock has already demonstrated significant growth, surging 35% since June 1st. It is currently trading at a price to funds from operations (P/FFO) multiple of 12.5x based on the projected 2025 figures. The new price target of $23 indicates a P/FFO multiple of 14.2x for the year 2025, suggesting further upside potential for the stock.
Jefferies' updated assessment of Macerich's stock provides investors with a revised outlook on the company's valuation and market position, backed by solid consumer spending data and strategic financial maneuvers.
In other recent news, The Macerich Company has been the subject of several significant developments. Deutsche Bank (ETR:DBKGn) has initiated a Hold rating on Macerich's stock, citing potential execution challenges ahead. The firm also drew attention to Macerich's "Path Forward" strategy, which aims to enhance portfolio quality and reduce debt. Meanwhile, the company has raised over $600 million in equity and planned to repay $1.17 billion in debt.
Macerich has also reported a 14.4% year-over-year decrease in core Funds From Operations Per Share (FFOPS) to $0.38 for the third quarter of 2024. Following this, Goldman Sachs revised its 2025 forecast for Macerich's FFO per share downwards by 9%. Additionally, the company has announced a public offering of 18 million shares of common stock to repay a $478.0 million mortgage loan secured by its Washington Square property.
In terms of analyst assessments, Piper Sandler, JPMorgan, and Mizuho (NYSE:MFG) have all adjusted their outlooks on Macerich. Piper Sandler raised the price target to $17 from $14, maintaining an underweight rating. JPMorgan increased its price target from $16.00 to $22.00, but retained an underweight rating. Mizuho upgraded Macerich to a neutral rating and raised its price target to $22.
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