Eastgroup Properties (EGP – Research Report), the Real Estate sector company, was revisited by a Wall Street analyst yesterday. Analyst Ki Bin Kim from Truist Financial maintained a Hold rating on the stock and has a $168.00 price target.
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Ki Bin Kim’s rating is based on a combination of factors that reflect both positive operational performance and certain challenges faced by Eastgroup Properties. The company’s 2025 guidance for Funds from Operations (FFO) per share was slightly below consensus estimates, but this is consistent with its historically conservative guidance approach. Additionally, the issuance of significant equity could have a slightly dilutive effect on returns, given the tight yield spread compared to the Secured Overnight Financing Rate (SOFR). Despite these concerns, the company has shown strong operational results for 2024 and continues to maintain a healthy 2025 outlook.
While Eastgroup Properties has demonstrated robust leasing activity and development plans, including new development starts amounting to $125 million in the fourth quarter of 2024 and expectations for $300 million more in 2025, there are underlying issues that contribute to the Hold rating. The slight decline in occupancy, partly due to a known vacate, and the overall impact on Same Store Net Operating Income (SSNOI) growth are factors that temper the otherwise positive performance metrics. Additionally, the company boasts one of the strongest balance sheets in the Real Estate Investment Trust (REIT) sector, with a low debt-to-EBITDA ratio, which provides a solid foundation but also suggests limited room for aggressive growth strategies.