On Tuesday, Truist Securities revised its price target on shares of Kimco Realty Corporation (NYSE:KIM), a real estate investment trust (REIT), decreasing it to $22.00 from the previous $23.00, while keeping a Hold rating on the stock. The adjustment follows the company's first-quarter results for 2024.
The firm's analyst cited the rationale behind maintaining the Hold rating, noting an increase in the 2024 NAREIT Funds From Operations (FFO) estimate to $1.59 per share, up from the earlier projection of $1.58 per share. The 2025 NAREIT FFO forecast remains unchanged at $1.69 per share.
When considering the adjustments for the RPT merger charges, the 2024 FFO estimate stands at $1.63 per share, suggesting a normalized year-over-year increase of 3.8%, and a subsequent 4.2% increase in 2025.
The new price target of $22.00 is grounded in a net asset value (NAV) per share of $25.49, which is based on a forward 12-month net operating income (NOI) capitalization rate of 6.3%. Additionally, a five-year levered discounted cash flow (DCF) analysis supports this target, with a calculated value of $22.68 per share. This DCF uses a perpetuity growth rate of 2.75% and a discount rate of 9.95%.
The revised price target reflects a modest reduction from the previous target and is part of an overall assessment of Kimco's financial outlook and market performance. The analysis takes into account various factors including the company's recent earnings, projected growth, and market conditions that influence the valuation of its shares.
InvestingPro Insights
InvestingPro data highlights Kimco Realty Corporation's (NYSE:KIM) current market position with a market capitalization of $12.75 billion. The company's price-to-earnings (P/E) ratio stands at 36.51, which adjusts to 39.31 when looking at the last twelve months as of Q1 2024. Despite a relatively high P/E ratio, Kimco's PEG ratio for the same period is 0.35, indicating a potential undervaluation relative to its earnings growth. Additionally, the company's dividend yield as of the latest data is 5.08%, showcasing its commitment to returning value to shareholders, supported by a dividend growth of 4.35% over the last twelve months.
InvestingPro Tips suggest that investors consider Kimco's consistent dividend track record, having maintained dividend payments for 33 consecutive years and raising its dividend for 3 consecutive years. This is particularly relevant for income-focused investors. However, it's important to note that two analysts have revised their earnings estimates downwards for the upcoming period, which could impact future dividend sustainability. For readers looking to delve deeper into Kimco's financial health and future prospects, there are additional InvestingPro Tips available. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of insights that could shape your investment strategy.
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