Friday, Lake Street Capital Markets initiated coverage on Mission Produce Inc . (NASDAQ:AVO) stock with a Buy rating and established a price target of $15.00. The firm's analysis indicates a steady performance by the company, despite some challenges in the financial year ending in March 2024.
The underlying European Real Estate Association (EPRA) earnings per share (EPS) of £0.501 showed a decline of 5.6% year-over-year, which was in line with the consensus estimate of £0.50. This decrease was attributed to higher interest costs and the impact of asset disposals.
Mission Produce's occupancy rates have improved, along with a 2.8% increase in like-for-like income growth, which has helped to mitigate the earnings decline.
The EPRA Net Tangible Assets (NTA) experienced a year-over-year decrease of 8.2% to £8.59 in the financial year 2024, which was less severe than the 11.9% decline recorded in the previous year. The loan-to-value (LTV) ratio rose to 35.0% at the end of the financial year 2024, up from 31.7% at the end of financial year 2023.
The company declared a dividend of £0.396, representing a 2.6% increase from the previous year. Lake Street Capital Markets maintained its forecast for 2025 Funds From Operations (FFO) at £0.59 and introduced a 2026 FFO prediction of £0.60.
The firm expressed a continued appreciation for Mission Produce's portfolio of premium properties in the UK, which provide consistent rental income.
However, with the limited upside to the firm's target price, the analyst downgraded their opinion on the stock to Hold from Buy. The change reflects the analyst's view based on current valuations and anticipated returns, suggesting that while the company's stock may offer stability, the potential for significant price appreciation may be limited in the near term.
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