On Thursday, BTIG maintained a Buy rating for EastGroup Properties (NYSE:EGP) stock with a consistent price target of $218.00. EastGroup Properties surpassed third-quarter expectations, reporting Funds from Operations (FFO) per share of $2.13, which was $0.03 higher than analyst estimates and consensus. The company also nudged the midpoint of its full-year 2024 FFO per share guidance up by $0.02 to $8.35.
Despite strong results, including 5.5% growth in same-store net operating income (SSNOI) on a generally accepted accounting principles (GAAP) basis and 50.9% GAAP leasing spreads, the company adjusted its 2024 forecasts. EastGroup Properties now anticipates an average occupancy rate of 97.0% and a 5.9% increase in cash SSNOI growth, slightly lowering occupancy and SSNOI guidance by 10 basis points (bps) and 20 bps, respectively.
The company has also scaled back on development starts, reducing the budget by $30 million to $230 million, marking the lowest level since 2020. On the other hand, EastGroup significantly raised its acquisition guidance for the third consecutive quarter. The company now plans to acquire $400 million worth of operating properties this year, a 51% increase from the previous quarter and more than double the amount initially projected.
The upcoming earnings call is expected to provide further details about tenant demand within EastGroup's markets, future occupancy trends leading into 2025, and the nature and projected returns of the new acquisitions. BTIG has indicated that their estimates for EastGroup Properties are currently under review following these announcements.
In other recent news, EastGroup Properties has reported notable financial developments. The company's funds from operations (FFO) per share rose by 8.5% to $2.05 in the second quarter of 2024, prompting upward revisions for the third quarter and year-end FFO guidance. Occupancy rates remained strong, ending the quarter at 97.4% and maintaining an average of 97%. Furthermore, EastGroup Properties announced a 10.2% increase in its quarterly dividend, raising it to $1.40 per share from the previous $1.27.
Mizuho upgraded EastGroup's stock from Neutral to Outperform, citing expectations of rent growth surpassing forecasts, potential upward revisions in Street FFO figures, and the company's strategic capital allocation history. Morgan Stanley and RBC Capital Markets also adjusted their outlooks on EastGroup, raising their price targets and maintaining their ratings, based on increased core FFO estimates reflecting higher net operating income projections.
These recent developments highlight EastGroup's strategic approach in the real estate environment and its commitment to sustaining growth. However, it's important to note that these are just recent developments and do not provide a comprehensive view of the company's performance or future prospects.
InvestingPro Insights
EastGroup Properties' (NYSE:EGP) strong performance and strategic adjustments are reflected in recent InvestingPro data and tips. The company's market cap stands at $8.82 billion, with a P/E ratio of 37.85, indicating investor confidence in its growth potential. This aligns with the company's recent FFO beat and raised guidance.
InvestingPro Tips highlight EGP's commitment to shareholder value, noting that it "has raised its dividend for 12 consecutive years" and "has maintained dividend payments for 47 consecutive years." This consistent dividend growth, coupled with a current dividend yield of 3.09%, underscores the company's financial stability and appeal to income-focused investors.
The company's robust financial health is further evidenced by its profitability over the last twelve months and analysts' predictions of continued profitability this year. These factors support BTIG's maintained Buy rating and the optimistic outlook on EGP's performance.
For investors seeking a deeper understanding of EastGroup Properties' potential, InvestingPro offers 11 additional tips, providing a comprehensive analysis of the company's financial position and market performance.
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