BofA: Concerns For Kimco Realty In 2018, 2019 Justify Downgrade

Kimco Realty Corp KIM reported fourth-quarter results Thursday. Despite a top-and-bottom-line beat in the report, at least one Wall Street analyst is projecting multiple concerns for the REIT. 

The Analyst

Bank of America's Craig Schmidt downgraded Kimco Realty's stock rating from Buy to Neutral with a price target lowered from $17.50 to $16.50.

The Thesis

Kimco Realty's earnings report showed the company is taking the right steps to improve its portfolio for the long-term, but there are two negative aspects that can't be overlooked, Schmidt said in the downgrade note. (See the analyst's track record here.)

Kimco expects a weaker same-store net operating income growth in 2018 of 1.25 to 2 percent, below expectations, the analyst said. The midpoint reading of 1.6 percent would represent the lowest growth since the recession and may imply there are "many unknowns" for 2018 and possibly 2019.

The REIT's $300-million share repurchase program announcement is "short-sighted" given the balance sheet's already high leverage, while the free cash flow is needed to fund a large redevelopment program, Schmidt said. 

Price Action

Shares of Kimco Realty were trading higher by more than 2 percent Friday afternoon. 

Related Links:

Analyst: REITs Falling On Rising Treasury Bond Rates

The 10 Most Expensive Stocks In The S&P 500

Posted In: Bank of AmericaCraig SchmidtAnalyst ColorREITDowngradesPrice TargetAnalyst RatingsReal Estate

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.