Scotiabank downgrades Macerich to Underperform on challenging road ahead

Scotiabank downgraded Macerich to Underperform from Sector Perform with a price target of $14, down from $16. The firm cites the company’s “somewhat disappointing” Q1 results and the announcement of its strategic plan to address leverage for the downgrade. Although Scotiabank believes action is needed to address Macerich’s high net debt to EBITDA leverage, it says the path to low-to-mid six-times leverage will result in 3-4 years of earnings headwinds as assets are sold or handed back to lenders. Plus, there is the potential for another round of equity issuance driven shareholder earnings dilution of 10%, the analyst tells investors in a research note.