On Wednesday, Morgan Stanley revised its stance on shares of Activia Properties Inc. (3279:JP) (OTC: ATVXF), moving its stock rating from Overweight to Equalweight. The firm has also adjusted the price target to JPY 36,700 from the previous JPY 442,000. This change reflects a recalibration of expectations for the company's internal growth and capital policy measures.
The downgrade was influenced by the firm's dividend yield target, which at 4.9%, stands below the real estate investment trust's (REIT) own projection of 5.3% for the fiscal period ending May 2025.
Morgan Stanley's previous price target had included a premium based on anticipated internal growth through the elimination of rent-free periods and increases in office rents, as well as expected gains from capital policy measures and property sales. These factors are now considered to be fully integrated into the forecasts, and the firm's outlook for capital policy measures has diminished.
Morgan Stanley's 12-month dividend per share (DPS) estimate for Activia Properties is set at JPY 18,000, aligning with the REIT's own plan. From this estimate, the firm has derived a price target of JPY 367,000. This new target suggests a limited upside compared to other companies in Morgan Stanley's coverage universe, prompting the rating downgrade.
The revised price target and stock rating reflect Morgan Stanley's current analysis of Activia Properties' financial outlook and market performance expectations. The firm's assessment is based on the REIT's planned dividends and anticipated internal growth, alongside considerations of its capital policy and potential property sales gains.
Investors in Activia Properties Inc. can now reference the updated price target and rating from Morgan Stanley as they evaluate their positions in the company's stock. The new Equalweight rating indicates that the firm views the company's stock as aligned with the average market performance.
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