Alexandria Real Estate Equities, Inc. (ARE), with a market cap of $21.2 billion, is a leading urban office REIT specializing in life science, agtech, and technology campuses. Known for pioneering the life science real estate niche, the Pasadena, California-based company develops and operates high-quality, collaborative environments in key innovation clusters across North America.
Shares of this life science real estate company have underperformed the broader market over the past 52 weeks. ARE has risen 3.3% over this time frame, while the broader S&P 500 Index ($SPX) has gained 27%. In 2024, ARE stock declined 4.4%, compared to SPX's 18.1% YTD gain.
Narrowing the focus, ARE stock has also fallen short of the S&P 500 Real Estate Sector SPDR's (XLRE) 18.8% rise over the past 52 weeks and an 8.3% increase on a YTD basis.
Alexandria Real Estate Equities has struggled over the past year due to rising long-term bond yields and reduced expectations for rate cuts. This has diminished the stock's appeal compared to "risk-free" alternatives. Moreover, despite beating Q2 AFFO per share estimates and showing rental rate growth, the stock dipped 3.5% due to missing revenue targets and a cut in the full-year FFO guidance to $8.89 per share - $9.01 per share. Additionally, concerns over lower-than-expected same-property net operating income (NOI) growth and a decrease in cash reserves further impacted investor sentiment.
For the current fiscal year, ending in December, analysts expect ARE's FFO to grow 5.6% year over year to $9.47 per share. The company's earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on one another occasion.
Among the 14 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on eight “Strong Buy” ratings, one “Moderate Buy,” and five “Holds.”
This configuration is less bullish than three months before, with 12 analysts suggesting a "Strong Buy."
On Aug. 5, RBC Capital lowered Alexandria Real Estate’s price target to $130 and maintained an "Outperform" rating, citing strong Q2 results but noting that recent large transactions will likely reduce earnings.
The mean price target of $137.54 represents a premium of 13.5% to ARE's current levels. The Street-high price target of $186 suggests that the stock could rally as much as 53.5% from here.
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.
