Prologis (NYSE:PLD) shares plunged by nearly 6% today after the logistics-focused real estate investment trust delivered better-than-expected first-quarter results but lowered its financial outlook.
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PLD’s Q1 Results
During the quarter, revenue jumped by 10.7% year-over-year to $1.96 billion, which exceeded estimates by $120 million. In sync, the EPS of $0.63 outpaced expectations by $0.05. The core FFO (Funds from Operations) improved to $1.28 per share from $1.22 per share in the year-ago period.
Prologis’ Macro Woes
Citing the current macroeconomic environment of uncertainty and elevated interest rates, Hamid Moghadam, the co-founder, Chairman, and CEO of Prologis, noted that the company’s customers are focusing on controlling costs. This, in turn, is weighing on decision-making and the pace of leasing. Consequently, Moghadam anticipates a slower business environment over the next one or two quarters.
A Lowered Outlook
Owing to this challenging leasing environment and lower net absorption expectations, Prologis anticipates that there will be lower average occupancy for the year. Consequently, the company has lowered its outlook for occupancy, same-store growth, and earnings.
For Fiscal year 2024, Prologis foresees an EPS of $3.15-$3.35 versus the prior outlook of $3.20-$3.45. The average occupancy is expected to be between 95.75%-96.75%, compared to the previous estimate of 96.5%-97.5%. Additionally, cash same-store NOI growth for the year is pegged at 6.25%-7.25%. The company’s previous estimate for same-store growth stood at 8%-9%. For Q1, same-store NOI stood at 5.7%.
What Is the Target Price for PLD?
Prologis shares have now declined by nearly 13.3% so far this year. Overall, the Street has a Strong Buy consensus rating on Prologis, alongside an average PLD price target of $146.29. However, analysts’ views on the stock could see a revision following today’s earnings report.
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