On Friday, RBC Capital adjusted its stance on Kilroy Realty Corporation (NYSE:KRC), downgrading the stock from Outperform to Sector Perform and reducing its price target to $39 from $44. The firm cited challenges in identifying near-term catalysts that could narrow the valuation gap in the current market environment, despite recognizing potential upside in the shares based on public market valuations.
The analyst noted that Kilroy Realty, with its high-quality office portfolio, is poised to weather market uncertainties. However, the broader market weakness is not something the company can completely evade. In light of these market conditions, RBC Capital has revised its estimates to account for anticipated declines in occupancy and extended periods required for development projects to stabilize.
The new price target of $39 represents a decrease from the previous target of $44, reflecting the firm's adjusted expectations for Kilroy Realty's performance. The downgrade comes amidst a backdrop of market volatility that has affected various sectors, including real estate.
Kilroy Realty's portfolio, known for its premium office spaces, is expected to face the same challenges that are impacting the broader market. These include potential occupancy declines as companies reassess their space needs and potentially slower stabilization of new developments due to economic headwinds.
RBC Capital's revised rating and price target for Kilroy Realty indicate a more cautious outlook on the company's near-term growth prospects. The firm's analysis suggests that while Kilroy Realty is a solid player in the office real estate sector, current market dynamics could temper its performance in the immediate future.
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