Valued at a market cap of $8.4 billion, Federal Realty Investment Trust (FRT) is a real estate company that owns, operates and redevelops high-quality retail-based properties located primarily in major coastal markets. The North Bethesda, Maryland-based company’s retail properties are anchored by supermarkets, drug stores or high-volume, value-oriented retailers, which provide consumer necessities.
Shares of this retail REIT have underperformed the broader market over the past 52 weeks. FRT has declined 4.4% over this time frame, while the broader S&P 500 Index ($SPX) has gained 12.5%. Moreover, on a YTD basis, the stock is down 12.7%, compared to SPX’s 1.4% rise.
Narrowing the focus, FRT has also lagged behind the Real Estate Select Sector SPDR Fund’s (XLRE) 8.6% uptick over the past 52 weeks and 3.5% return on a YTD basis.
On May 8, FRT delivered its Q1 earnings results. However, despite posting better-than-expected FFO of $1.70 per share and revenue of $309.2 million, its shares plunged 1.8% in the following trading session. Adding to the positives, due to higher rental income, its overall revenue improved 6.1% from the year-ago quarter. Meanwhile, its FFO advanced 3.7% year-over-year, and its comparable property operating income (POI) grew 2.8%, excluding lease termination fees and prior period rents collected. Additionally, its comparable portfolio occupancy reached 93.6%, up 180 basis points from the same quarter last year.
Looking ahead to fiscal 2025, FRT raised its FFO per share guidance to $7.11 to $7.23, which represents 6% growth at the midpoint year-over-year, and maintained its EPS guidance of $3 to $3.12.
For the current fiscal year, ending in December, analysts expect FRT’s FFO to grow 5.8% year over year to $7.16 per share. The company’s FFO surprise history is mixed. It exceeded or met the consensus estimates in three of the last four quarters, while missing on another occasion.
Among the 16 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on nine “Strong Buy,” one “Moderate Buy,” and six “Hold” ratings.
This configuration is slightly less bullish than two months ago, with 10 analysts suggesting a “Strong Buy” rating.
On May 9, Evercore Inc. (EVR) analyst Steve Sakwa maintained a “Buy” rating on FRT and set a price target of $112, which indicates a 14.5% potential upside from the current levels.
The mean price target of $112.75 represents a 15.3% premium from FRT’s current price levels, while the Street-high price target of $135 suggests an upside potential of 38.1%.
