On Monday, Piper Sandler adjusted its outlook on Alexander's Inc. (NYSE:NYSE:ALX), reducing the price target to $145.00 from the previous $160.00, while keeping a Underweight rating on the stock. The firm's revised estimates take into account the first quarter results of 2024, excluding a termination fee from IKEA, accelerated rents, and $7 million in annual rents.
The firm forecasts that Alexander's will overpay its dividend by approximately $30 million in 2024 and by about $50 million in 2025. The revision reflects a decrease in the 2024 estimated funds from operations (FFO) by $2.05 to $12.81, and a reduction in the 2025 estimated FFO by $0.59 to $8.85. The new estimates also consider the company's significant cash on hand, which stands at $525 million, to cover the predicted dividend overpayments.
Furthermore, the cash reserve is expected to support continuing leasing capital expenditures and a substantial renewal package for Bloomberg set for 2029, which is estimated to cost $265 million. This package includes $125 million in tenant improvements (TIs) and an estimated $140 million in free rent.
The financial adjustments by Piper Sandler come after a detailed analysis of Alexander's financial position and future obligations. The company's cash on hand is slated to be allocated to various financial commitments over the coming years, including the dividend overpayments and the Bloomberg renewal package.
InvestingPro Insights
According to InvestingPro data, Alexander's Inc. (NYSE:ALX) presents a compelling financial profile with a P/E ratio of 10.72, indicating that the stock may be trading at a low price relative to its near-term earnings growth. This is complemented by a robust PEG ratio of 0.11 over the last twelve months as of Q1 2024, suggesting potential for future earnings growth relative to its share price. Moreover, the company's commitment to shareholder returns is evident with a substantial dividend yield of 8.07%, supported by a history of maintaining dividend payments for 15 consecutive years.
InvestingPro Tips highlight that ALX's liquid assets exceed its short-term obligations, providing a layer of financial stability. Additionally, analysts predict profitability for the company this year, which has been profitable over the last twelve months. These factors, combined with a revenue growth of 11.4% over the same period, contribute to a solid investment thesis.
For those interested in delving deeper into Alexander's Inc.'s financials, there are 6 additional InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/ALX. Moreover, for a more comprehensive investment analysis, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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