Market Overview

Spirit Realty Capital Offers Growth At A Reasonable Price, Morgan Stanley Upgrades Stock


Spirit Realty Capital Inc (NYSE: SRC) has completed the spin-off of SMTA REIT. Following this move, the company’s key fundamental metrics are comparable to its peers and the stock offers growth opportunities at a reasonable valuation, according to Morgan Stanley.

The Analyst

Morgan Stanley’s Vikram Malhotra upgraded Spirit Realty Capital to Overweight and raised the price target to $49.

The Thesis

After eliminating flat, non-property management fees, Spirit Realty Capital is expected to generate AFFO growth of around 3 percent in 2020 and north of 3.3 percent in 2021, which is in-line with several peers, Malhotra said in the upgrade note.

The analyst added that the company’s tenant concentration is lower than peers, as it derives 24.4% of NOI from its top 10 tenants, versus the peer average of 29.7%. Spirit Realty Capital’s leverage and dividend payout are comparable to peers.

Although the company’s share price has outperformed year to date, further upside may be driven by steady execution. Malhotra added that many Triple Net REIT stocks were trading near record highs and investors could begin looking for stocks that offer growth opportunities at a reasonable price.

Price Action

Shares of Spirit Realty Capital traded around $44.76 at time of publication.

Related Links:

Spirit Realty Capital Analyst Ratings

Spirit Realty And The Block-Deal Frenzy

Latest Ratings for SRC

Jul 2019UpgradesEqual-WeightOverweight
Jun 2019MaintainsNeutral
Dec 2018DowngradesMarket PerformUnderperform

View More Analyst Ratings for SRC
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas REIT Upgrades Price Target Analyst Ratings Trading Ideas Real Estate


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