Baird Raises Price Target On Prologis For Second Time In A Month

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Baird downgraded Prologis Inc PLD to Neutral from Outperform, but raised the price target to $54 from $52, which represents the second increase during the past four weeks. The analysts expect the company to continue to deliver solid growth and achieve an "A"-rated balance sheet within 6-12 months, but they believe this is tempered by a fair valuation.

Despite the downgrade, Baird forecast rent spreads to be meaningfully positive for Prologis going forward. Their valuation framework assumes around 60 percent tenant rollover over the next three years (including early renewals) with a 15 percent mark-to-market on those leases.

Additionally, the analysts estimate development to continue at an approximate pace of $2 billion of starts per year on a proportionate share basis. However, they believe that increasing this level of activity will be difficult in relation to upside catalysts for investors, taking into account rising new construction across the U.S.

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Posted In: Analyst ColorDowngradesAnalyst RatingsBaird
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