On Wednesday, BTIG reaffirmed its Buy rating and $154.00 price target on ProLogis (NYSE:PLD), following the company's first-quarter earnings release.
ProLogis reported a Core Funds From Operations (FFO) per share of $1.28 for the first quarter of 2024, which was slightly above BTIG's estimate and matched the consensus on Wall Street. However, ProLogis has revised its full-year 2024 guidance downwards by $0.07 to a midpoint of $5.42, primarily attributing this change to an anticipated decrease in average occupancy levels by 75 basis points to 96.25%.
The lowered forecast is partly due to an expected occupancy decline throughout the first three quarters of 2024, in response to an increase in new supply. BTIG noted that ProLogis's guidance indicates that the imbalance between supply and demand in the market might extend further than previously anticipated. Management's remarks in the earnings press release highlighted a deceleration in leasing activity as clients aim to manage expenses.
Despite these challenges, BTIG pointed out encouraging signs in ProLogis's leading indicators when compared to the fourth quarter of 2023. Lease proposals saw a substantial increase of approximately 25% to 95 million square feet, and the time taken to secure leases was reduced by 9.3% to 49 days.
Additionally, space utilization experienced a significant boost of 220 basis points to 85.0%, likely due to inventory restocking after a robust holiday season. The U.S. Industrial Business Indicator (IBI) Activity Index also showed improvement, rising to 57.9 from 55.8.
The firm is also anticipating additional information on how recent global events such as the Baltimore bridge collapse, decreased activity at the Panama Canal, shipping disruptions in the Red Sea, and a slowdown in China's economic growth and consumption might impact supply chain dynamics.
BTIG plans to reassess its estimates after the earnings call later in the day.
InvestingPro Insights
As ProLogis navigates a challenging environment with an expected decrease in occupancy levels and a revised full-year guidance, investors are closely monitoring its performance metrics. According to InvestingPro data, ProLogis boasts a significant market capitalization of $101.07 billion and a robust gross profit margin of 75.87% over the last twelve months as of Q4 2023. Despite trading at a high earnings multiple with a P/E ratio of 46.75, the company has demonstrated a strong revenue growth of 32.56% in the same period, underlining its ability to expand amidst market fluctuations.
InvestingPro Tips highlight ProLogis as a prominent player in the Industrial REITs industry, with a history of raising its dividend for 10 consecutive years, indicating a commitment to shareholder returns. Additionally, the company has been profitable over the last twelve months, providing a sense of stability for investors. For those interested in a deeper dive into ProLogis's financial health and future prospects, InvestingPro offers additional insights and tips. To access these, consider using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With 8 more InvestingPro Tips available, investors can gain a comprehensive understanding of ProLogis's position in the market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.