Spirit Realty Drops 5% As 3Q Sales Miss Estimates; Street Says Hold

Shares of Spirit Realty Capital fell 4.5% in Monday’s extended trading session after the company’s 3Q sales fell short of analysts’ expectations. The real estate investment trust’s adjusted revenue grew 3.1% to $112.9 million, but missed Street estimates of $119.2 million.

Spirit Realty’s (SRC) adjusted fund from operations (AFFO), a key measure of profitability, declined 17.2% to $0.72 per share, but exceeded analysts’ forecasts of $0.69.

Spirit Realty CEO Jackson Hsieh said, “The third quarter marked a rapid, positive shift in our business, as our tenants reopened, rent collections accelerated and the capital markets became more constructive. Our portfolio has performed extremely well, with occupancy at 99.3% and rent collections reaching 93.3%, a strong affirmation of this team’s underwriting and the strength and stability of our well-diversified portfolio.” (See SRC stock analysis on TipRanks).

Last month, UBS analyst Brent Dilts initiated coverage on the stock with a Sell rating and a price target of $27 (13.2% downside potential). Dilts is concerned about the company’s rent collection challenges and believes that the situation will likely persist for a longer time than anticipated by the Street.

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 2 Holds, 2 Buys and 1 Sell. The average price target of $34.50 implies upside potential of about 10.9% to current levels. Shares have dropped by 36.8% year-to-date.

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