Shares of Simon Property Group (SPG) - Get Simon Property Group, Inc. Report firmed Friday, touching a 52-week high, after Bank of America increased its price target for the country’s biggest shopping mall REIT to $165 from $150.
Analyst Jeffrey Spector affirmed his buy rating.
“We see several positive catalysts ahead to move SPG's share price higher,” Spector said.
“1) Upward [Wall Street earnings estimate] revisions [for] 2022 and 2023, based on a stronger-than-expected second half of 2021.
“2) Taubman, [a mall owner Simon bought last year,] is exceeding underwriting, as U.S. luxury sales boom and SPG uses its strong balance sheet to add new tenants to the portfolio.
“3) International tourism moves from a headwind to a tailwind, benefiting Simon's coastal and tourist destination assets.
“4) SPG offers key late-cycle winning attributes, including a high distribution yield of about 4.2% … and strong distribution growth (estimating 6.7% and 6.3% in 2022 and 2023, respectively).
“5) Normalization of rents and lease terms in 2022, as retailers are focused … on omnichannel efforts, which is boosting demand for space at dominant retail centers.”
Simon Property shares recently traded at $145.01, up 0.7%, and on Friday touched a 52-week high $145.60. They have jumped 11% over the past month.
Morningstar analyst Kevin Brown puts fair value for the stock at $149 but assigns it no moat.
“Simon is still dealing with the fallout of the coronavirus pandemic,” he wrote last month.
“We believe that Class A malls will rebound … but the short-term impact to Simon's cash flow has been significant.”