BofA upgrades Tanger Outlets stock, raises target on improved earnings

On Wednesday, BofA Securities shifted its perspective on Tanger Factory (NYSE:SKT) Outlet Centers (NYSE:SKT), upgrading the stock from Underperform to Buy and increasing the price target to $31.00, up from the previous target of $24.00. The adjustment comes after Tanger demonstrated the strength of its business platform during a recent summit.

The BofA Securities analyst acknowledged Tanger's success in meeting key objectives, which has been recognized by the market with the stock now trading at an 11% multiple premium compared to its peers. This is a notable change from its historical average, where it traded at a 9% discount. The new price objective reflects a lower capitalization rate, down to 8.2% from 9.0%, and a shift from a 5% discount to a 5% premium, underscoring the company's robust platform and balance sheet.

Tanger's efforts to enhance its assets have not gone unnoticed, contributing to improved earnings visibility. The company's strategy to upgrade its tenant mix is seen as a positive move, despite expectations that it will take time to yield results. Due to this, while the analyst has upgraded the stock, they have maintained a cautious stance on the speed at which the new initiatives will prove their effectiveness.

The upgrade and price target adjustment are based on several factors, including Tanger's strong platform and balance sheet, successful asset improvements, and the company's approach to refining its tenant mix. The analyst believes that while the strategy to reduce renewals from 95% to the low 80% range is sound, it is anticipated to be a gradual process.

Investors have responded positively to the news, with shares of Tanger Factory Outlet Centers reflecting the upgraded outlook and new price target set by BofA Securities. The company's stock is now positioned more favorably among its retail real estate peers, indicating a shift in market sentiment towards Tanger's growth and strategic plans.

In light of BofA Securities' recent upgrade of Tanger Factory Outlet Centers (NYSE:SKT), InvestingPro data provides additional context for investors considering the stock. With a market capitalization of $3.13 billion and a P/E ratio of 29.34, Tanger's valuation reflects a market that is pricing in expectations for future growth. This is further underscored by a PEG ratio of 1.57 for the last twelve months as of Q4 2023, which suggests that the stock's price is somewhat high relative to its earnings growth.

InvestingPro Tips highlight that Tanger has shown a commitment to rewarding shareholders, having raised its dividend for 3 consecutive years and maintained dividend payments for 32 consecutive years. Additionally, the company's stock price has seen a large uptick over the last six months, with a 25.29% total return, indicating strong recent performance. However, analysts caution that the stock is trading at a high P/E ratio relative to near-term earnings growth and at a high Price/Book multiple of 5.52, which could suggest that the stock is currently valued on the higher side.

Get The App

Join the millions of people who stay on top of global financial markets with Investing.com.

Download Now

For investors looking for more detailed analysis and additional InvestingPro Tips, there are 6 more tips available on the platform. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which can offer further insights into Tanger's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.