On Friday, Wells Fargo made a notable adjustment to its outlook on Iron Mountain (NYSE:IRM), a real estate investment trust (REIT), by increasing its price target to $90 from the previous $80 while retaining an Overweight rating on the stock.
The firm highlighted Iron Mountain as a top idea within the REIT sector, acknowledging the stock's impressive 50% gain over the past year, which notably outperformed the broader REIT index's 5% increase.
Wells Fargo pointed out that despite the surge in Iron Mountain's stock price, dedicated REIT investors appear to still be under-invested in the company. The firm believes that the stock's recent performance and Iron Mountain's substantial market capitalization, which stands at $23 billion, are likely to attract more attention from investors.
Wells Fargo's analysis suggests that Iron Mountain is trading at approximately 18 times its adjusted funds from operations (AFFO) per share, which is slightly higher than the average for REITs, which is around 17 times. However, the firm sees potential for further growth, given Iron Mountain's superior shareholder return, which includes both AFFO per share growth and dividends.
The revised price target of $90 is based on an estimated 18.5 times the firm's forecasted FY'25E AFFO per share for Iron Mountain. This adjustment reflects Wells Fargo's confidence in Iron Mountain's ability to continue delivering strong shareholder returns, driven by its growth and dividend prospects.
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