Kilroy Realty's analyst price target has increased from $40.93 to $42.13 per share. Analysts cite improving leasing trends in key markets and gradual progress on lease expirations as drivers for the upward revision.
Analyst Commentary
Recent research updates reflect a mix of optimism and caution regarding Kilroy Realty's trajectory. Analysts continue to evaluate the company's leasing progress, market fundamentals, and valuation amid evolving market dynamics.
Bullish Takeaways- Bullish analysts see meaningful progress in lease expiration management and expect continued momentum through 2027, particularly in core markets.
- Improvements in key West Coast markets, such as increased street cleanliness and market stability, are viewed as supporting a healthier leasing environment.
- Recent price target increases highlight confidence in Kilroy's potential for recovery, supported by stable demand in the San Francisco Bay Area.
- The ongoing rise in rental activity and positive signals from recent market tours contribute to a more constructive view on Kilroy’s near-term execution.
- Bearish analysts remain concerned about limited growth prospects outside the Bay Area, with new leasing volumes lagging in other major markets.
- Some believe that Kilroy’s current valuation already reflects improving office demand, leaving less room for upside after recent share price outperformance.
- Given the high availability of office space on the West Coast, downside risks are identified for retention rates and funds from operations over the next several years.
- There is continued caution around the company’s ability to drive material occupancy gains and offset sector headwinds in a challenging office environment.
What's in the News
- Goldman Sachs downgraded Kilroy Realty to Sell from Neutral and maintained a $33 price target due to concerns over low office tenant retention and high office space availability. The firm predicts a 7% decline in annual funds from operations over the next three years (Goldman Sachs research note).
- Kilroy Realty acquired Maple Plaza, a 293,000-square-foot Class A office campus in Beverly Hills, for $205 million. This marks its first entry into this supply-constrained and highly sought-after market.
- The company executed a 24,000-square-foot lease with genomics firm Color at Kilroy Oyster Point Phase 2 in South San Francisco, advancing lease-up activity in its life science development project.
Valuation Changes
- Consensus Analyst Price Target: Increased from $40.93 to $42.13 per share, reflecting a modest upward revision.
- Discount Rate: Decreased slightly from 8.42% to 8.40%.
- Revenue Growth: Shifted from -0.15% to +0.15%, indicating a move from contraction to modest expected growth.
- Net Profit Margin: Marginally decreased from 5.65% to 5.60%.
- Future P/E: Increased slightly from 97.04x to 99.83x.
Disclaimer
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