Shares of Simon Property Group are down more than 4% in Tuesday’s pre-market trading after the real estate company’s 3Q revenue of $1.06 billion missed the Street estimates of $1.08 billion and declined over 25% from the year-ago quarter.
Simon Property’s (SPG) funds from operations (FFO) of $2.05 per share missed consensus estimates of $2.29 per share and plunged 33% year-over-year, reflecting lower revenues from domestic and international operations. The company said that the pandemic-led impact was partially offset by cost reduction initiatives.
Simon Property’s CEO David Simon said that “Despite COVID-19, we are encouraged by the increases we are seeing in shopper traffic, retailer sales and tenant rent collections across our portfolio.” (See SPG stock analysis on TipRanks).
Following the results, BMO Capital analyst John Kim maintained a Hold rating and a price target of $68 (about 14% downside potential) on the stock, citing improving trends despite 3Q miss. Kim said “We expect cash flows to improve as abatement and bad debt decline meaningfully from 2Q/3Q levels. Although structural questions on retail will continue, we believe SPG is well placed to thrive long term given its high-quality, diverse portfolio and fortress balance sheet.”
Like Kim, the Street is also sidelined on the stock with a Hold analyst consensus. The average price target of $68 implies downside potential of about 14% to current levels. Shares have declined by 46.9% year-to-date.
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