Prologis Soars to a New 52-Week High - Analyst Blog

By Zacks Equity Research,

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Shares of Prologis Inc. ( PLD ) crafted a new 52-week high, touching $43.33 in the second half of the trading session on May 10. The closing price of this San Francisco-based industrial real estate investment trust (REIT) on May 10 was $43.32, representing a solid year-to-date return of 16.8%. The trading volume for the session was nearly 2.0 million shares.

While this stock has hit a 52-week high, considering the estimate revision trends over the last 30 days, we believe that this upside is not likely in the near term for this Zacks Ranks #3 (Hold) stock.

Factors to Consider

Prologis is endeavoring to capitalize on its global prospects. With growth in e-Commerce, there is a rising demand for Class-A facilities and the company stands to benefit as it has the capacity to offer modern distribution facilities in strategic infill locations. Moreover, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.

Its build-to-suit deal in the first quarter with end-to-end e-Commerce service provider - SpeedFC, a subsidiary of Navarre Corp. ( NAVR ) and the transaction with Chinese logistics provider, Deppon are expected to contribute meaningfully to the company's top line.

On the flip side, continued troubles in the residential sector have weighed on the company's commercial property operations. The credit crunch has also widened the bid-ask spread between buyers and sellers of commercial real estate, which has caused deal volumes to fall compared with the pre-recession levels. In addition, elevation in market vacancy will offset Prologis' ability to push through rental rate increases.

On Apr 24, Prologis reported first quarter 2013 core FFO (funds from operations) per share of 40 cents, in line with the Zacks Consensus Estimate and the prior-year quarter figure.

Results reflect decent revenues in the reported quarter, and completion of the Japan-REIT IPO as well as the European joint venture. Moreover, its strategic measures have helped it lower its overall debt level.

Additionally, Prologis has now delivered positive earnings surprises in 2 of the last 4 quarters with an average beat of 2.4%.

Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate for full-year 2013 FFO per share moved down 1.2% to $1.64. On the other hand, the Zacks Consensus Estimate for 2014 FFO has moved up 1.7% to $1.83 per share.

Last week, a number of other REITs also touched 52-week highs. These include DDR Corp. ( DDR ) and Highwoods Properties Inc. ( HIW ).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

DDR CORP (DDR): Free Stock Analysis Report

HIGHWOODS PPTYS (HIW): Free Stock Analysis Report

NAVARRE CORP (NAVR): Free Stock Analysis Report

PROLOGIS INC (PLD): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: DDR , HIW , NAVR , PLD

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