On Wednesday, Citi has adjusted its outlook on Americold Realty Trust (NYSE:COLD), reducing the price target to $25.00 from the previous $30.00 while maintaining a Neutral rating on the stock. Currently trading at $22.78, the company has seen its shares decline 21.72% year-to-date. The revision follows the company's third-quarter results and is based on updates to the firm's financial model for Americold. According to InvestingPro data, Americold commands a market capitalization of $6.48 billion.
The revised price target suggests a multiple of 15.8 times the estimated adjusted funds from operations (AFFO) for the year 2025. The estimated AFFO has been slightly decreased from $1.60 to $1.58, reflecting modest revenue growth and challenging expense comparisons, especially considering the improved cost controls experienced in 2024.
The company currently offers a 3.81% dividend yield, providing some compensation for patient investors during this period of price weakness.
The change in the price target is also attributed to the limited visibility into operating conditions for Americold Realty Trust. According to Citi's assessment, the business is more operating intensive compared to its traditional industrial real estate peers, which has influenced the applied multiple in the valuation.
The analyst's comments shed light on the reasoning behind the adjusted price target and outlook. "We are updating our COLD model to reflect 3Q results. Accordingly, 2025E AFFO decreases from $1.60 to $1.58, reflecting modest revenue growth and tougher expense comps following better controls in 2024.
Additionally, we are lowering our target price from $30 to $25 or 15.8x 2025E AFFO. Our lower applied multiple reflects the more limited visibility into operating conditions and the more operating intensive nature of the business relative to traditional industrial real estate peers.
In other recent news, Americold Realty Trust reported substantial growth in Q3 2024 earnings, with an 11% increase in Adjusted Funds From Operations (AFFO) and same-store Net Operating Income (NOI). AFFO reached an estimated $100 million, or $0.35 per share. Furthermore, the company announced a $148 million automated expansion in Dallas-Fort Worth and exceeded its 2024 development start guidance, totaling $305 million.
RBC (TSX:RY) Capital revised its outlook on Americold, reducing the price target to $30 while maintaining an Outperform rating on the stock. This decision came after reassessing the company's performance and acknowledging the challenges Americold faces in the current operating environment.
Despite these challenges, RBC Capital remains optimistic about Americold's prospects, citing the company's successful expansion of service margins. The firm projects growth for Americold to accelerate once the industry moves towards restocking inventories, targeting the second half of 2025 for this anticipated acceleration.
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