Tuesday, Truist Securities adjusted its stance on Boston Properties Inc. (NYSE:BXP), reducing the 12-month stock price target to $75 from $77, while keeping a Hold rating on the stock. The revision comes amid expectations of persistent high interest rates impacting the company's financial forecast. The new target suggests a 19% total return potential for the real estate investment trust's shares.
The move to lower the price target is accompanied by a slight decrease in the firm's normalized Funds From Operations (FFO) estimates for Boston Properties. For the year 2024, the estimate has been trimmed by 0.4%, and for 2025, the reduction is more significant at 3.5%. These adjustments reflect a cautious approach towards the company's earnings potential in light of the anticipated interest rate environment.
Truist Securities has previously recalibrated its ratings on other office real estate investment trusts (REITs), switching Vornado Realty Trust (NYSE:VNO) to Hold in September and SL Green Realty (NYSE:SLG) Corp. to Hold in January. The firm's current investment strategy favors REITs that present deep value, particularly those located in the Sunbelt region, which are expected to offer higher growth opportunities.
Boston Properties, known for its high-quality portfolio and platform, is recognized for its premium stock price in the sector. Still, Truist Securities indicates that the company may not necessarily provide superior near-term growth when compared to the most deeply valued stocks in the office REIT sector.
Investors in Boston Properties will be monitoring the company's performance closely, particularly in relation to the broader market trends and the impact of interest rate changes on its operations and stock value.
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