Truist Securities has increased the price target for shares of Americold Realty Trust (NYSE: NYSE:COLD) to $33.00, up from the previous $31.00, while maintaining a Buy rating on the stock.
The adjustment follows the company's second-quarter results, which prompted the analyst to revise their adjusted funds from operations (AFFO) per share estimates for the years 2024 and 2025.
The revised estimates for the company's AFFO per share now stand at $1.47 for 2024, up from the previous forecast of $1.41, and $1.60 for 2025, an increase from $1.55. These estimates align with the management's guidance range for 2024, which is between $1.44 and $1.50 per share. The analyst's projections suggest a year-over-year growth of 16% for 2024, followed by a 9% increase in 2025.
The new price target of $33 is based on a detailed five-year levered discounted cash flow (DCF) analysis. The DCF calculation arrived at a value of $34.45, utilizing a perpetuity growth rate of 3.5% and a discount rate of 9%. Additionally, the price target incorporates a 21-time target multiple on the estimated 2025 AFFO.
Underpinning the DCF model are assumptions for the year 2024, which include an anticipated 12.4% growth in same-store net operating income (SSNOI), accounting for rent, storage, and service revenues. However, the model also reflects a slight decline of 0.8% in SSNOI growth.
In other recent news, Americold Realty Trust exhibited a strong performance in the second quarter of 2024, with a significant 36% increase in Adjusted Funds From Operations (AFFO), reaching $109 million or $0.38 per share.
The growth was primarily driven by robust same-store warehouse services and effective pricing strategies. The company's core EBITDA also reached $165 million, reflecting a 25% margin. Amid these developments, Americold has increased its full-year 2024 AFFO guidance to a range of $1.44 to $1.50 per share.
In addition to financial performance, Americold Realty Trust has been recognized by Baird for its operational efficiency. Baird raised the price target for Americold's shares to $31 from the previous target of $29, maintaining an Outperform rating. The firm noted that Americold's strategic improvements and focus on operational efficiency have mitigated the effects of a general slowdown in consumption, putting the company in a favorable position for the future.
InvestingPro Insights
Following the optimistic view from Truist Securities, recent data from InvestingPro further informs investors about Americold Realty Trust's (NYSE:COLD) financial health and market position. With a market capitalization of $8.01 billion, Americold stands out as a significant player in the Industrial REITs sector. The company's revenue for the last twelve months as of Q2 2024 is reported at $2.67 billion, despite a slight revenue decline of 4.72%. However, the gross profit margin remains robust at 30.86%, indicating effective cost management.
InvestingPro Tips highlight that Americold is expected to turn profitable this year, an important factor for investors considering the company's future earnings potential. Additionally, the company's status as a prominent player in its industry is reinforced by an adjusted price-to-earnings (P/E) ratio of 88.57 for the last twelve months as of Q2 2024, which, while high, may reflect market expectations for future growth. On the other hand, short-term obligations surpassing liquid assets could be a point of caution for investors monitoring the company's liquidity.
Investors should note that Americold's dividend yield stands at 3.12%, with the last dividend ex-date recorded on June 28, 2024. This yield could be attractive to income-focused investors. The company's stock is currently trading at 83.19% of its 52-week high, with a previous close price of $28.20. For those looking to delve deeper into Americold's prospects, InvestingPro offers additional tips, providing a more comprehensive analysis of the company's financials and market position.
For those interested in exploring further, there are additional InvestingPro Tips available, offering nuanced insights that could help inform investment decisions regarding Americold Realty Trust.
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