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Mizuho sets eyes on Regency Centers stock citing defensive tenant mix and solid balance sheet

EditorEmilio Ghigini
Published 04/18/2024, 05:11 AM

Thursday, Mizuho initiated coverage on Regency Centers (NASDAQ: NASDAQ:REG) stock, a real estate company specializing in shopping centers, with a Neutral rating and a price target of $60.00. The firm highlighted the company's high-quality portfolio, which features defensive tenants and is situated in areas with favorable demographics, as well as a strong balance sheet.

Regency Centers' stock has experienced a lag compared to its peers and the RMZ year-to-date, attributed to weaker expected earnings growth for 2024. Despite this, the stock is trading at a multiple that aligns with its subsector average, which is currently at 17 times Adjusted Funds From Operations (AFFO). This valuation is seen as a potential opportunity for investors with a long-term perspective.

The 18 times multiple on the estimated 2025 AFFO leads to the $60 price target, which implies a total return possibility of 10%. Mizuho's stance reflects a cautious optimism, recognizing the stock's potential amidst a challenging economic environment.

The firm also noted that while Regency Centers presents an appealing entry point for investors focused on the long term, there are significant macroeconomic challenges to consider. These include concerns about stagflation and rising Weighted Average Cost of Capital (WACC), which could keep the stock's performance constrained in the short term.

Mizuho's analysis suggests that clarity regarding the magnitude and timing of Regency Centers' earnings recovery, expected in the second half of 2024 or in 2025, will be crucial for the stock's movement. Until then, the expectation is that the stock may remain within a certain range as investors and analysts seek more definitive signs of earnings growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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