uploads///Analyst Recommendation

Why Wall Street Loves Simon Property Group

Anirudha Bhagat - Author

Jul. 25 2018, Updated 9:01 a.m. ET

Analysts’ recommendations

Simon Property Group’s (SPG) four back-to-back quarters of positive earnings surprises and its impressive outlook have made analysts optimistic about its growth prospects. Analysts’ target price of $183.33 for SPG implies a 7.5% rise from its current price of $170.48.

In 2017, the stock rose 33.5%. Most of the 19 analysts (~68%) covering the stock are bullish, recommending “buys.” Meanwhile, 32% of analysts have recommended “holds.”

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Simon Property has been focusing on several expansion and development activities to drive mall traffic and maintain occupancy. The company’s improvements in its base minimum rent per square foot, total sales per square foot, and net operating income margin have made analysts bullish on the stock. However, the company is facing lower revenues due to the exit of retailers from its malls amid the ongoing retail crisis.

Competitor’s ratings

GGP (GGP), one of the company’s main competitors, has also received mostly “buy” recommendations from analysts, whereas its other two major rivals, Equity Residential (EQR) and Kimco Realty (KIM), have received mostly “hold” recommendations.

Two out of the ten analysts covering GGP have provided “strong buy” recommendations on its stock, while a similar number of analysts have recommended “buy” ratings. The remaining six analysts have “hold” recommendations on the stock. GGP has a target price of $23.45, which signifies a 12.8% upside to its current price of $20.79.

Out of 20 analysts, two have provided “strong buy” recommendations, two have provided “buy” recommendations, and 16 have provided “hold” recommendations on Equity Residential stock. The remaining two analysts have provided “sell” recommendations on the stock. Its target price of $67.11 signifies a 4.4% upside from its current price of $64.29.

Meanwhile, of the 20 analysts covering Kimco Realty, one has recommended a “strong buy,” five have recommended “buys,” 12 have recommended “holds,” and two have recommended “sells.” The stock’s target price of $16.81 implies a 1.2% upside to its current price of $16.61. Investors seeking exposure to multitenant retail real estate can invest in REIT ETFs such as the Pacer Benchmark Retail Real Estate SCTR ETF (RTL), of which Simon Property makes up 15.3%.


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