Zacks Investment Research downgraded shares of Simon Property Group Inc. (SPG) from NEUTRAL to UNDERPERFORM on July 28, 2014, with a target price of $154.00.
We are downgrading our recommendation on Simon Property to Underperform from Neutral on lower-than-expected revenues in the second quarter. While we believe that the spin-off decision stands good for the long term, the near term dilution impact of it on earnings is unavoidable. Therefore, despite an earnings beat in the second quarter we remain skeptical about the company's growth prospects in the near-to-medium term. Nevertheless, the company has been making concerted efforts to draw in more crowds to its retail properties and counter the challenges resulting from online shopping. However, we believe that the implementation of such measures require a decent upfront cost and therefore, would limit any robust growth in its profit margins in the near term amid a protracted economic recovery.
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