Regency Stock Is Fully Valued

Although Regency Centers Corp (NYSE: REG) continued to report robust operating results, the stock is currently trading at a premium to peers and above its five-year historical average for price/FFO.

Argus’ Jacob Kilstein maintains a Hold rating on the company, while stating the stock appeared fully valued at present.

Stock Performance

Kilstein mentioned that while the stock has benefited from the delayed interest rate hikes from the Fed, rates were likely to rise during 2016, which could have an adverse impact on Regency Centers and other REITs.

“Our long-term rating remains BUY, reflecting the company’s focus on grocery-store-anchored shopping centers in first-ring suburbs and the generally stronger outlook for grocery stores than for general retail,” the analyst explained.

Related Link: BTIG Research Initiates Coverage On Regency Centers At Neutral

Also, Kilstein pointed out that Regency Centers had mostly completed the repositioning of its portfolio while maintaining a robust balance sheet, by matching development spend with the sale of non-core assets.

Estimates Raised

For Q2:16, the company reported 8 percent revenue growth and 9 percent core FFO growth.

The 2016 core FFO estimate has accordingly been raised from $3.21 to $3.25 per share, to reflect the higher NOI guidance and better than anticipated Q2 results.

“We expect steady NOI growth into 2017 given strong demand for grocery-store-anchored retail space,” Kilstein stated.

The EPS estimate for 2017 has also been raised from $3.41 to $3.46.

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