On Monday, Mizuho Securities maintained its positive stance on Netstreit Corp. (NYSE:NTST) shares, a real estate investment trust, reiterating its Outperform rating and a price target of $17.00. Despite Netstreit's year-to-date performance lagging behind its sector peers, Mizuho anticipates the company to emerge as a leading performer by the end of 2024.
Netstreit has experienced a 5.5% decline compared to its Triple Net peers, who have seen a 12% increase, and the broader RMZ index, which has risen by 15%. This underperformance has been attributed to narrower investment spreads and several tenant credit issues, notably with companies such as Dollar Tree/Family Dollar, Walgreens, and Big Lots (NYSE:BIG).
Mizuho's outlook for Netstreit is optimistic, with the expectation that the company will benefit from widening investment spreads. Moreover, the firm's growth balance sheet is in a strong position, being well-prepared and pre-funded. Improved credit outcomes for existing tenant concerns are anticipated in the second half of 2024, which could further bolster Netstreit's performance.
The upcoming Non-Deal Roadshow (NDR) with Netstreit's CEO and CFO is expected to bring these topics to the forefront, providing an opportunity for the company to address investor concerns and outline its growth strategies. Mizuho's analysis suggests that Netstreit's current valuation offers an enticing opportunity within the Triple Net subsector.
In other recent news, Netstreit Corp. faced a series of significant developments. The company reported a net loss of $2.3 million in Q2 2024, despite this, it declared a quarterly cash dividend of $0.21 per share and reported over $116 million in gross investment activity at a 7.5% blended cash yield. Patricia Gibbs, the Senior Vice President and Chief Accounting Officer, announced her resignation effective October 2024, with Chief Financial Officer Daniel Donlan set to assume her role.
Netstreit initiated a new at-the-market equity offering program to sell up to $300 million of its common stock, replacing a previous agreement under which the company sold approximately $108.1 million in common stock. Analysts from Raymond James upgraded Netstreit's stock from Outperform to Strong Buy, showing confidence in the company's resilient re-tenanting potential.
Mizuho maintained its Outperform rating on Netstreit, expressing a positive outlook for the company. The firm anticipates that Netstreit will benefit from expanding investment spreads and a robust growth balance sheet that is well-funded. Netstreit maintains its 2024 AFFO per share guidance of $1.25 to $1.28. These are the recent developments in the company's operations.
InvestingPro Insights
Netstreit Corp. (NYSE:NTST) is currently trading at a premium with a P/E ratio of 238.41, reflecting investors’ high expectations for future earnings growth. While the company's year-to-date price total return has seen a decline of 5.52%, Mizuho Securities' optimistic stance is supported by the InvestingPro Tips, which highlight that Netstreit is expected to see net income and sales growth in the current year. Moreover, the company has been profitable over the last twelve months, with a strong gross profit margin of 88.11%.
InvestingPro Data further reveals that Netstreit's revenue growth has been robust, with a 30.09% increase over the last twelve months as of Q2 2024. The company's liquid assets surpass its short-term obligations, indicating a healthy liquidity position. This financial stability, coupled with a fair value estimate of $16.05 from InvestingPro, suggests that the current share price of $16.26 is closely aligned with analyst expectations.
For investors looking to delve deeper into Netstreit's financial health and future prospects, there are additional InvestingPro Tips available, providing a comprehensive analysis of the company's performance and potential investment opportunities.
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