On Apr 14, Zacks Investment Research downgraded Prologis Inc. PLD to a Zacks Rank #3 (Hold).
Why the Downgrade?
Prologis generates a significant part of its revenues from operations outside the U.S. Given its international presence, the company faces unfavorable foreign currency movements and other economic fluctuations that impair its top-line growth. Intensifying competition and prevailing interest rate issues also pose concerns.
Nevertheless, the industrial real estate market has been experiencing growth over several past quarters, thanks to the rising trend of Internet retailing and supply-chain consolidation. This, in turn, is generating greater demand for logistics infrastructure and efficient distribution networks.
Amid this environment, this industrial real estate investment trust ("REIT") – Prologis – is well poised to benefit from its capacity to offer modern distribution facilities in strategic infill locations. The company also announced a 9% increase in its dividend rate in Feb 2015.
Yet, the recovery in the industrial market has continued for long and the chances of any striking decrease in availability rates are less. Hence, we believe the positives have already been factored in the current stock price of Prologis.
Over the past 7 days, though the Zacks Consensus Estimate for 2015 moved up a cent to $2.08, the same for 2016 remained unchanged at $2.28 per share.
Investors interested in the REIT industry may consider better-ranked stocks like Terreno Realty Corp. TRNO, SL Green Realty Corp. SLG and Whitestone REIT WSR. All these stocks hold a Zacks Rank #2 (Buy).
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