Stock of the Day

December 17, 2020

Alexandria Real Estate Equities (ARE)

$77.40
-$1.21 (-1.5%)
Market Cap: $13.60B

About Alexandria Real Estate Equities

Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500 company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. As the pioneer of the life science real estate niche since our founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science, agtech, and advanced technology mega campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a total market capitalization of $33.1 billion and an asset base in North America of 73.5 million SF as of December 31, 2023, which includes 42.0 million RSF of operating properties, 5.5 million RSF of Class A/A+ properties undergoing construction and one near-term project expected to commence construction in the next two years, 2.1 million RSF of priority anticipated development and redevelopment projects, and 23.9 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science, agtech, and advanced technology mega campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, agrifoodtech, climate innovation, and technology companies through our venture capital platform. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

Alexandria Real Estate Equities Bull Case

Here are some ways that investors could benefit from investing in Alexandria Real Estate Equities, Inc.:

  • The current stock price is around $72.68, which may present a buying opportunity for investors looking for value in the real estate sector.
  • Alexandria Real Estate Equities, Inc. recently reported earnings per share (EPS) of $2.30, exceeding analyst expectations, indicating strong financial performance.
  • The company has declared a quarterly dividend of $1.32, translating to an annualized dividend yield of approximately 7.26%, which can provide a steady income stream for investors.
  • Analysts have a generally positive outlook, with a consensus rating of "Hold" and an average target price of $99.54, suggesting potential for price appreciation.
  • Despite a slight year-over-year revenue decline, the company remains a leader in the life science real estate investment trust (REIT) sector, which is expected to grow due to increasing demand for life sciences facilities.

Alexandria Real Estate Equities Bear Case

Investors should be bearish about investing in Alexandria Real Estate Equities, Inc. for these reasons:

  • The company has a high dividend payout ratio of 694.74%, which may raise concerns about sustainability and the ability to maintain dividends in the future.
  • Recent analyst downgrades have seen price targets reduced significantly, with some analysts setting targets as low as $76.00, indicating potential bearish sentiment.
  • Revenue has decreased by 1.4% year-over-year, which could signal challenges in maintaining growth and profitability.
  • The stock has a high price-to-earnings (P/E) ratio of 95.63, suggesting that it may be overvalued compared to its earnings, which could deter value-focused investors.
  • The company’s debt-to-equity ratio of 0.60 indicates a moderate level of debt, which could pose risks in a rising interest rate environment.
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