Realty Income Corporation (O) is structured as a real estate investment trust (REIT). Valued at 47.99 billion by market cap, the company acquires and manages freestanding commercial properties that generate rental income through long-term net lease agreements. Its portfolio consists of about 15,450 commercial properties leased to over 1,500 clients operating in more than 89 different industries across all 50 states in the U.S., U.K., and six other European nations.
Realty Income has underperformed the broader market considerably over the past year. The REIT has declined 8.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 29.3%. In 2024 alone, the REIT has lost 4%, compared to SPX's 11.4% gains on a YTD basis.
Narrowing the focus, O’s underperformance is also apparent in comparison to the iShares Cohen & Steers REIT ETF (ICF). The exchange-traded fund has gained 8% over the past year, compared to O’s loss for the period.
Realty Income reported a 33.5% surge in Q1 revenue to $1.26 billion, boosted by its acquisition of Spirit Realty in January. Despite this positive financial report and the company's 5.6% dividend yield, investor interest remained low, causing the stock to continue its downtrend following the earnings release on May 6th.
For the current fiscal year, ending in Dec. 2024, analysts expect O to report EPS growth of 4.8% year over year to $4.19 on a diluted basis. The company's earnings surprise history is mixed. It beat or matched the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 18 analysts covering O stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, one “Moderate Buy,” and 10 “Holds.”
This configuration has been consistent over the past months.
Recently, Mizuho analyst Vikram Malhotra revisited his rating on Realty Income, maintaining a ‘Buy’ rating and increasing the stock’s price target from $56 to $59 per share. However, Greg McGinniss from Scotiabank maintained a “Hold” rating on Realty Income, with a price target of $54.00.
The mean price target of $61.43 represents an 11.5% premium to O’s current price levels. The Street-high price target of $74 suggests an upside potential of 34.3%.
On the date of publication, Rashmi Kumari 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.
