Simon Property price target raised to $172 from $148 at Piper Sandler

Piper Sandler raised the firm’s price target on Simon Property to $172 from $148 and keeps an Overweight rating on the shares. While last week’s Fed reversal on rate cuts released the animal spirits for REITs, it doesn’t change the fundamentals overnight and thus the firm continues to favor industrials and retail heading into Q4 earnings when managements provide guidance. Given inflation is up 20% in the past 3 years versus 15% wage growth, stagflation aptly fits the current economic mood and thus Piper doesn’t think a mild recession would feel any different. That said, the firm believes real estate will price in the potential of lower rates, which should help heal the transaction market and encourage the housing market. Office should also benefit as the potential for lower rates reduces risk premiums and easing of refinancings, it adds.