Pasadena, California-based Alexandria Real Estate Equities, Inc. (ARE) is a life science REIT that owns, operates, and develops collaborative life science mega campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. Valued at a market cap of $17.1 billion, the company particularly focuses on collaborative life science, agtech, and technology campuses
Companies worth $10 billion or more are generally described as “large-cap” stocks and ARE fits right into that category. The real estate company is the pioneer in the life science real estate niche and has been recognized for its transparency, reporting, and disclosure practices.
Despite its strengths, the company has declined 26.2% from its 52-week high of $131.82, achieved on Dec. 20, 2023. Moreover, it has declined 20.4% over the past three months, significantly underperforming the broader Nasdaq Composite’s ($NASX) 7.5% increase over the same time frame.
Additionally, in the longer term, ARE has fallen 24.9% over the past 52 weeks, significantly lagging behind NASX’s 29.1% returns. On a YTD basis, shares of ARE are down nearly 23.3%, massively underperforming NASX’s almost 29.1% gains over the same time frame.
To confirm its bearish trend, ARE has been trading below its 200-day and 50-day moving average since late October.
Shares of ARE plunged 1.3% following its Q3 earnings release on Oct. 21. The company’s revenue of $791.6 million increased 10.9% from the year-ago quarter primarily due to robust leasing activity and rental rate growth. Moreover, its AFFO increased 4.9% year-over-year to $2.37 per share. However, noting tenant write-offs and lease termination at a major property, the company lowered its full-year 2024 revenue and EPS guidance, which might have dampened investor confidence.
ARE’s underperformance becomes more evident when compared to its rival, BXP, Inc. (BXP) which gained 2.7% over the past 52 weeks and 4.5% on a YTD basis.
Despite Alexandria Real Estate’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 14 analysts covering it, and the mean price target of $120.54 suggests a 23.9% premium to its current levels.
