UPDATE: Compass Point Initiates Coverage On Alexander & Baldwin As Key Assets Drive Value

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In a report published Wednesday, Compass Point analyst Wilkes Graham initiated coverage on
Alexander & Baldwin
ALEX
with a Buy rating and $58.00 price target. In the report, Compass Point noted, “We are initiating on shares of ALEX with a Buy rating and a $58 price target. We believe that our $58/share sum of the parts NAV estimate fully encapsulates ALEX's complex portfolio of CRE and land. ALEX is the fourth largest landowner in Hawaii with just under 89,000 acres of total ownership, and is the largest producer of sugar, asphalt, and aggregate in Hawaii. "The company owns approximately 23,000 acres of saleable land in Hawaii and 5 million square feet of commercial real estate, about half of which will eventually be recycled out of the Mainland U.S. and onto the Islands. Later in this report we include our sum of the parts valuation analysis and describe in detail how we arrive at our valuation for each dial-moving asset. The $31 in value creation to NAV from BV is primarily driven by $17 at the luxury resort Kukui'ula on Kauai, $6 from Hawaiian NOI, and $4/share in ATCF earned through 2015E. Our assumed discount rates in our asset-level DCFs range from 8% to 20% depending on our knowledge of and confidence level in critical assumptions; our weighted average discount rate for the company overall is 10.6%” Alexander & Baldwin closed on Tuesday at $39.29.
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Posted In: Analyst ColorInitiationAnalyst RatingsCompass PointWilkes Graham
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