Prologis Posts Q2 Beat and Raises Guidance; Shares Rise

Prologis, Inc. (PLD) reported stronger-than-expected Q3 results driven by robust growth in market rents and valuations, strong demand for logistics space, and all-time low vacancies.

Shares of the global industrial real estate investment trust (REIT) gained 1% on October 15 to close at $136.98.

Markedly, Q3 adjusted earnings of $0.97 per share more than doubled year-over-year and significantly beat analysts’ expectations of $0.52 per share. The company reported earnings of $0.40 per share in the prior-year period.

The company reported revenues of $1.18 billion, beating analysts’ expectations of $1.03 billion. Rental revenues came in at $1.04 billion, up from $984 million in the prior-year quarter.

The company reported Q3 Funds from Operations (FFO) of 1.04 per share versus FFO of $0.90 per share in the prior-year period. (See PLD stock charts on TipRanks)

Based on robust Q3 results, the company raised its guidance for Fiscal 2021 and now forecasts net earnings in the range of $3.64 – $3.68 per share, compared to the previously guided range of $3.08 – $3.14 per share.

The REIT also forecasts core FFO in the range of $4.11 – $4.13 per share versus previous guidance of $4.04 – $4.08 per share.

Porlogis CFO Thomas S. Olinger commented, “Most of the benefit from the current environment will accrue to the future given our 22 percent in-place-to-market rent spread, the valuation impact on our promotes, our leverage capacity, the $21 billion of development build-out and, most importantly, the vast opportunity set that our global footprint provides.”

Following the strong Q3 results, BMO Capital analyst John Kim reiterated a Buy rating on the stock with the price target of $140 (2.2% upside potential)

Kim forecasts the company to report earnings of $0.81 per share for the fourth quarter of 2021.

Consensus among analysts is a Strong Buy based on 11 Buys and 2 Holds. The average PLD price target of $145.31 implies 6.1% upside potential from current levels.

PLD scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.