Federal Realty Investment Trust: Performance Challenges Amid Mixed Analyst Sentiment
Rockville, Maryland’s Federal Realty Investment Trust (FRT) is a prominent real estate investment trust (REIT) engaged in owning, managing, developing, and redeveloping high-quality retail and mixed-use properties. The firm is valued at a market capitalization of $8.7 billion and primarily targets affluent communities with strong retail demands.
Stock Performance: A Struggle Against the Market
Over the past year, FRT’s stock has struggled to keep pace with the broader market. While FRT has increased by only 4.1% during the past 52 weeks, the S&P 500 Index ($SPX) has surged by 22.3%. In the year-to-date (YTD) scenario, FRT has experienced a decline of 6.2%, in contrast to the 4% rise in the SPX.
When compared to the Real Estate Select Sector SPDR Fund’s (XLRE) return of 11.2% over the last year and its YTD gain of 3.4%, FRT’s performance appears even less favorable.
Earnings Release: Market Reaction to Mixed Results
Following its Q4 earnings report on February 13, FRT saw shares drop by 6.1%. The company reported Q4 revenues of $311.4 million, falling short of expectations. Nevertheless, this revenue reflects a 6.7% year-over-year increase. Additionally, FRT’s Funds From Operations (FFO) rose by 5.5% from the previous year to $1.73 per share, aligning with forecasts. Despite solid leasing activity and occupancy gains, the results did not satisfy investor expectations.
Looking ahead, the company has provided preliminary guidance for fiscal 2025, projecting FFO per share between $7.10 and $7.22.
Analyst Insights and Ratings
For the current fiscal year ending in December, analysts anticipate FRT’s FFO will grow by 5.6% to $7.15 per share. The company’s history of meeting earnings estimates has been mixed; it met or exceeded expectations in half of the last four quarters.
The consensus among the 16 analysts covering FRT is a “Strong Buy,” with 11 “Strong Buy,” one “Moderate Buy,” and four “Hold” ratings. This sentiment has improved slightly since three months ago when only 10 analysts recommended a “Strong Buy.”
On January 17, Truist analyst Ki Bin Kim maintained a “Buy” rating on FRT, though he adjusted the price target to $113, which indicates a 7.6% potential upside based on current levels. The average price target stands at $123.17, suggesting a 17.3% upside, while a Street-high target of $135 points towards a potential 28.5% increase.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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