North Bethesda, Maryland-based Federal Realty Investment Trust (FRT), a leading real estate investment trust (REIT) with a market cap of $9.4 billion, operates within the real estate sector. Specializing in premium retail and mixed-use properties, the company focuses on high-demand, densely populated urban markets across the U.S.
Shares of this real estate investment trust have underperformed the broader market over the past 52 weeks. FRT has gained 18.7% over this time frame, while the broader S&P 500 Index ($SPX) has increased nearly 27%. In 2024, shares of FRT are up 10.8%, compared to SPX’s 16.8% gain on a YTD basis.
However, zooming in further, Federal Realty has outpaced the S&P 500 Real Estate Sector SPDR’s (XLRE) 18.2% gain over the past 52 weeks and 6.2% returns on a YTD basis.
Federal Realty has underperformed relative to the SPX primarily due to elevated interest rates, rising refinancing costs, slower retail sector growth impacting its property performance, and a relatively high valuation compared to peers, which has dampened investor enthusiasm.
However, on Aug. 1, the company reported Q2 revenue of $296.1 million, surpassing expectations, and increased its full-year forecast for funds from operations (FFO) per share to $6.70 to $6.88 due to strong leasing demand and higher rental rates. The company's FFO for the quarter was $141.3 million, or $1.69 per share, exceeding analysts' estimates.
For the current fiscal year, ending in December, analysts expect FRT’s FFO to grow 3.8% year over year to $6.80 per share. The company’s earnings surprise history is mixed. It beat or met the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 17 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” and six “Holds.”
On Aug. 19, Mizuho raised its price target on Federal Realty to $116 while maintaining a “Hold” rating, citing strong performance in shopping center REITs but noting that current valuations and macroeconomic risks warrant cautious selectivity.
The mean price target of $117.28 represents a premium of just 2.7% to FRT's current levels. The Street-high price target of $135 implies a modest potential upside of 18.2% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
