On Friday, Evercore ISI increased the price target for Rexford Industrial Realty (NYSE: REXR) to $55.00, up from the previous $54.00, while retaining an Outperform rating on the stock. The adjustment reflects expectations of significant acquisition activities and a stable financial outlook for the company.
The firm's analyst anticipates that Rexford Industrial Realty will undertake $300 million in acquisitions during the second half of 2024, bolstered by an existing near-term pipeline of $160 million. Looking further ahead, for the fiscal year 2025, the company is expected to pursue $400 million in acquisitions without any dispositions.
In terms of general and administrative expenses, the analyst projects $83.9 million for fiscal year 2024, slightly above the company’s guidance of $83 million. This figure is forecasted to climb to $91.5 million in fiscal year 2025, coinciding with the company's efforts to fill the vacant Chief Financial Officer position.
The company's interest expense for the latter half of 2024 is anticipated to align with the second quarter's run rate, leading to a full-year total of $100 million, which is in line with the provided guidance of approximately $99 million. This stability is attributed to the minimal amount of fixed-rate debt maturing in the second half of 2024.
Evercore ISI's updated model, which includes second-quarter results and the aforementioned assumptions, keeps the fiscal year 2024 core funds from operations (FFO) estimate at $2.34, at the upper end of the guidance range of $2.32 to $2.34. However, the fiscal year 2025 core FFO estimate has been slightly adjusted from $2.61 to $2.60, now sitting just below the consensus estimate of $2.62.
The revised price target also factors in a decrease in the risk-free rate used in the firm's discounted cash flow (DCF) calculation. The rate was reduced by 20 basis points to 4.15%, contributing to the price target increase from $54 to $55. This change comes amid a broader adjustment across the firm's coverage universe in response to falling interest rates.
In other recent news, Rexford Industrial Realty has been the focus of several analyst adjustments. Mizuho Securities lowered its price target on Rexford's stock to $50 from $52, citing a forecasted decrease in net operating income for fiscal year 2025. Baird and JPMorgan also reduced their price targets to $49 and $47 respectively, maintaining a neutral rating.
These analyst adjustments follow Rexford Industrial's strong first quarter, which saw a 12% increase in core Funds From Operations per share to $0.58 and an 8.5% growth in same-property net operating income on a cash basis. The company also completed over $1 billion in acquisitions and 3.2 million square feet of leasing activity.
In addition, Rexford Industrial reported robust leasing and transaction activity for the second quarter, executing leases totaling 1.125 million square feet and completing the purchase of two industrial properties for a combined $143 million.
These recent developments provide a snapshot of the company's current financial and operational performance.
InvestingPro Insights
Amid the positive outlook from Evercore ISI, InvestingPro data and tips offer additional dimensions to assess Rexford Industrial Realty's (NYSE: REXR) performance and potential. With a market capitalization of $10.62 billion and a robust P/E ratio of 40.54, the company showcases its significant market presence and investor confidence. Investors are also buoyed by the company's consistent dividend growth, with dividends having increased for 11 consecutive years, signaling a commitment to shareholder returns.
Furthermore, Rexford's financial health is underlined by its liquid assets surpassing short-term obligations, providing a cushion for operational flexibility. This is particularly relevant as the company plans to aggressively pursue acquisitions. While the company is trading at a high earnings multiple, with a P/E ratio of 45.12 for the last twelve months as of Q2 2024, analysts remain optimistic about sales growth in the current year. This optimism is also reflected in the company's revenue growth of nearly 19.93% over the same period, indicating a strong trajectory going forward.
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