Bank of America has revised its price target for Phillips Edison (PECO, Financial), reducing it from $44 to $42, while maintaining a Buy rating on the stock. This adjustment comes after the company's first quarter Core Funds From Operations (FFO) per share of $2.34 exceeded expectations by $0.02, outperforming both Street and BofA forecasts.
Despite this positive performance, the firm has slightly reduced its financial projections for fiscal years 2025 and 2026. The new estimates are down by $0.01 and $0.02, respectively, due to marginally lower occupancy levels anticipated in the coming years. This tweak reflects a cautious outlook while still affirming confidence in the long-term growth potential of PECO.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for Phillips Edison & Co Inc (PECO, Financial) is $40.00 with a high estimate of $46.00 and a low estimate of $36.00. The average target implies an upside of 14.03% from the current price of $35.08. More detailed estimate data can be found on the Phillips Edison & Co Inc (PECO) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, Phillips Edison & Co Inc's (PECO, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Phillips Edison & Co Inc (PECO, Financial) in one year is $39.09, suggesting a upside of 11.43% from the current price of $35.08. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Phillips Edison & Co Inc (PECO) Summary page.
PECO Key Business Developments
Release Date: April 25, 2025
- Same-Center NOI Growth: Increased by 3.9% in the first quarter.
- Comparable Renewal Rent Spreads: Achieved a record high of 21.7% in the first quarter.
- Comparable New Leasing Rent Spreads: Reached 28.1% in the first quarter.
- Portfolio Occupancy: Ended the quarter at 97.1% leased.
- Anchor Occupancy: Remained strong at 98.4%.
- In-Line Occupancy: Ended the quarter at 94.6%.
- NAREIT FFO: Increased to $89 million or $0.64 per diluted share, reflecting an 8.5% year-over-year growth.
- Core FFO: Increased to $90.8 million or $0.65 per diluted share, reflecting an 8.3% year-over-year growth.
- Net Debt to Adjusted EBITDAre: 5.3 times as of March 31, 2025.
- Weighted Average Interest Rate: 4.4% on debt.
- Weighted Average Debt Maturity: 5.6 years.
- Liquidity: Approximately $760 million available.
- 2025 Guidance for NAREIT FFO Per Share: Reflects a 5.7% increase over 2024 at the midpoint.
- 2025 Guidance for Core FFO Per Share: Represents a 5.1% increase over 2024 at the midpoint.
- 2025 Same-Center NOI Growth Guidance: 3% to 3.5%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Phillips Edison & Co Inc (PECO, Financial) reported a strong quarter with a 3.9% increase in same-center NOI.
- High occupancy rates were maintained, with portfolio occupancy at 97.1% and anchor occupancy at 98.4%.
- The company achieved record high in-line renewal rent spreads of 21.7% and new leasing rent spreads of 28.1%.
- PECO's focus on necessity-based goods and services, which make up 71% of ABR, provides insulation from potential tariff disruptions.
- The company has a strong acquisition pipeline and affirmed its guidance for $350 million to $450 million in gross acquisitions for the year.
Negative Points
- There are concerns about the impact of tariffs and potential economic recession on PECO's operations.
- The company faces challenges with upcoming swap expirations, which could increase variable rate exposure.
- Despite strong leasing activity, there is uncertainty in the capital markets that could affect future growth.
- The economic environment remains volatile, which could impact consumer behavior and retailer demand.
- PECO's stock is trading at a cap rate that is higher than the cap rates of recent acquisitions, indicating tighter investment spreads.
