Thursday, March 7, 2024: Broadstone Net Lease (NYSE:BNL) received a Sell rating from Goldman Sachs, with the investment firm setting a $14.00 price target on shares of the real estate investment trust. The newly initiated hedge reflects a modest expected total return of 3% compared to the 14% average total return expected for the company’s full REIT hedge.
Goldman Sachs’ rating highlights a challenging financial landscape for Broadstone Net Lease, citing a higher weighted average cost of capital (WACC) due to a combination of a lower share price, an increase in the cost of debt and higher capitalization rates high for non-core sales. These factors are seen as constraints on the company’s ability to spread investments, which is the practice of investing across a range of assets to mitigate risk.
The firm’s analysis indicates that investment returns for Broadstone Net Lease have not increased commensurately with those of its peers, which may hinder the company’s ability to achieve significant growth in adjusted funds from operations per share (AFFOPS). This metric is crucial for REITs as it provides detailed information on the cash flow generated by their operations.
Without significant growth in AFFOPS, Goldman Sachs suggests that Broadstone Net Lease’s valuation is less likely to improve in the medium term. This outlook is based on current financial conditions and market performance indicators specific to the company and its operations.
The $14.00 price target suggests a cautious view on the performance potential of Broadstone Net Lease shares, reflecting the analyst’s perspective on the company’s financial health and market position relative to the broader mutual fund industry. real estate investment.
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