On Mar 26, Zacks Investment Research downgraded Jones Lang LaSalle Inc. JLL to a Zacks Rank #3 (Hold).
Why the Downgrade?
The client-relationship deals of the Chicago-based real estate operations firm are of such a nature that they can often be withdrawn at very short notice, thereby putting strains on revenues. Also, the Real Estate Services business segment, being cyclical in nature, experiences fluctuations in revenues and operating margins. This, in turn, could negatively affect the company’s long-term earnings expectations.
JLL also continues with its strategy of capitalizing on market consolidation, driving its revenue growth. Notably, early this month, JLL acquired Nextport, a tenant representation and relocation management service provider based in Stockholm, Sweden. This deal, expected to complement JLL’s already sturdy leadership position in the real estate services sector in Sweden, remains in sync with the company’s strategy to strengthen its business in EMEA (Europe, the Middle East and Africa) region.
However, due to its international presence, JLL often faces unfavorable foreign currency movements, which impacts its top-line growth. The company also counters stiff competition from international, regional and local players in the market. Further, an anticipated rise in interest rates in the medium-to-long term in the U.S. may lower the growth tempo of the commercial real estate sector and negatively impact JLL’s business activities.
Over the past 60 days, the Zacks Consensus Estimates for 2015 and 2016 have remained unchanged at $8.95 and $9.85 per share, respectively.
Investors interested in the real estate operations industry may consider stocks like CBRE Group, Inc. CBG, Reis, Inc. REIS and Landmark Infrastructure Partners LP LMRK. All these stocks hold a Zacks Rank #2 (Buy).
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