Wolfe upgrades ‘cash engine’ Simon Property to Outperform

Wolfe Research analyst Andrew Rosivach upgraded Simon Property Group to Outperform from Peer Perform with a $127 price target, which represents a total return of 15% with dividends. The company’s internal growth should be “relatively stable” as share is taken from closing malls, and it is a “cash engine” at just a 70% adjusted funds from operations payout ratio, which will likely be used to fund external growth, particularly buybacks, the analyst tells investors in a research note. The firm believes now is a “target rich environment” for Simon Property for capital deployment, be it buybacks or acquisitions. The stock trades at a discount to both strip center peers and overall real estate investment trusts, adds Wolfe.