Prologis Soars to a New 52-Week High - Analyst Blog
13 May 2013 - 8:30PM
Zacks
Shares of Prologis Inc. (PLD) crafted a new
52-week high, touching $43.33 in the second half of the trading
session on May 10. The closing price of this San Francisco-based
industrial real estate investment trust (REIT) on May 10 was
$43.32, representing a solid year-to-date return of 16.8%. The
trading volume for the session was nearly 2.0 million shares.
While this stock has hit a 52-week high, considering the estimate
revision trends over the last 30 days, we believe that this upside
is not likely in the near term for this Zacks Ranks #3 (Hold)
stock.
Factors to Consider
Prologis is endeavoring to capitalize on its global prospects. With
growth in e-Commerce, there is a rising demand for Class-A
facilities and the company stands to benefit as it has the capacity
to offer modern distribution facilities in strategic infill
locations. Moreover, leasing decisions that were earlier postponed
due to volatility in the markets are gradually coming off the
shelf.
Its build-to-suit deal in the first quarter with end-to-end
e-Commerce service provider - SpeedFC, a subsidiary of
Navarre Corp. (NAVR) and the transaction with
Chinese logistics provider, Deppon are expected to contribute
meaningfully to the company’s top line.
On the flip side, continued troubles in the residential sector have
weighed on the company’s commercial property operations. The credit
crunch has also widened the bid-ask spread between buyers and
sellers of commercial real estate, which has caused deal volumes to
fall compared with the pre-recession levels. In addition, elevation
in market vacancy will offset Prologis’ ability to push through
rental rate increases.
On Apr 24, Prologis reported first quarter 2013 core FFO (funds
from operations) per share of 40 cents, in line with the Zacks
Consensus Estimate and the prior-year quarter figure.
Results reflect decent revenues in the reported quarter, and
completion of the Japan-REIT IPO as well as the European joint
venture. Moreover, its strategic measures have helped it lower its
overall debt level.
Additionally, Prologis has now delivered positive earnings
surprises in 2 of the last 4 quarters with an average beat of
2.4%.
Estimate Revisions
Over the last 30 days, the Zacks Consensus Estimate for full-year
2013 FFO per share moved down 1.2% to $1.64. On the other hand, the
Zacks Consensus Estimate for 2014 FFO has moved up 1.7% to $1.83
per share.
Last week, a number of other REITs also touched 52-week highs.
These include DDR Corp. (DDR) and
Highwoods Properties Inc. (HIW).
Note: Funds from operations, a widely accepted and reported
measure of REITs performance, are derived by adding depreciation,
amortization and other non-cash expenses to net income.
DDR CORP (DDR): Free Stock Analysis Report
HIGHWOODS PPTYS (HIW): Free Stock Analysis Report
NAVARRE CORP (NAVR): Free Stock Analysis Report
PROLOGIS INC (PLD): Free Stock Analysis Report
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