Simon Property’s 2021 Profit Outlook Beats Estimates; Shares Gain

Real estate company Simon Property Group reported mixed 4Q results, as revenue beat the Street estimates but earnings fell short. Meanwhile, the company’s earnings outlook for fiscal 2021 exceeded analysts’ expectations. Shares rose 2.5% in Monday’s extended market trading session.

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Simon Property’s (SPG) 4Q earnings of $0.86 per share missed the consensus estimates by a penny and declined 48.2% year-over-year. Revenue declined about 24% year-over-year to $1.13 billion but topped the Street’s estimates of $1.09 billion.

The company’s funds from operations (FFO) came in at $2.17 per share, reflecting a negative impact of $0.95 per share due to lower revenues from the company’s domestic and international operations amid the COVID-19 pandemic, partially offset by cost reduction initiatives.

Simon Property’s CEO David Simon said, “We feel confident we have turned the corner, and we expect growth in earnings and cash flow in 2021.”

For fiscal 2021, the company anticipates earnings in the range of $4.60-$4.85 per share, which is much higher than analysts’ expectations of $3.90 per share. The company projects fiscal 2021 FFO to be in the range of $9.50-$9.75 per share. (See Simon Property stock analysis on TipRanks).

Following the results, BMO Capital analyst John Kim maintained a price target of $97 (14.6% upside potential) and a Hold rating on the stock. In a note to investors, the analyst said, “we believe SPG has high-quality assets (and a creative management) that are well-placed given demographic shifts to suburbia.”

Overall, consensus among analysts is a Hold based on 7 Holds, 1 Buy and 1 Sell. The average analyst price target of $95.43 implies downside potential of about 3.6% to current levels. Shares dropped 24.8% over the past year.

Furthermore, TipRanks data shows that financial blogger opinions are 86% Bullish, compared to a sector average of 71%.