MAC: Sector Peak Concerns And Occupancy Expectations Will Shape Future Returns

Analysts have nudged their fair value estimate for Macerich up from about $19.86 to $20.13, citing a series of recent price target increases and updated sector views that reflect current expectations for occupancy and earnings quality.

Analyst Commentary

Bullish Takeaways

Bullish analysts highlight the series of price target resets, from US$18 to US$19 and then above US$20, as support for a modestly higher fair value range for the shares.
Recent target changes are framed as part of a broader refresh of U.S. real estate and REIT coverage, suggesting that Macerich continues to warrant active attention within the sector.
Commentary around occupancy and earnings quality feeds into a more constructive view on execution, with analysts pointing to current expectations as consistent with slightly higher target prices.
Maintained positive or neutral ratings alongside higher targets indicate that, in analysts' view, current pricing still leaves some room before reaching their updated fair value assumptions.

Bearish Takeaways

Some bearish analysts have taken a more cautious stance on the broader shopping center REIT group, shifting sector views to Neutral even as they lift individual stock targets.
The view that portfolios are approaching or surpassing all time high occupancy levels suggests upside from further occupancy gains may be limited, which can cap expectations for growth in cash flows.
Sector level caution introduces the risk that any misstep in execution, such as slower leasing or weaker rent trends, could weigh more heavily on valuation than in a more upbeat sector backdrop.
With sector fundamentals seen as close to peak, bearish analysts may see less room for multiple expansion, which can restrict how far they are willing to push target prices above current fair value estimates.

Valuation Changes

The fair value estimate has edged up slightly from about US$19.86 to about US$20.13 per share, reflecting a modest adjustment in assumptions.
The discount rate has eased slightly from about 8.96% to about 8.89%, indicating a small change in the required return used in the model.
Revenue growth has shifted from about a 3.40% decline to about a 4.23% decline, implying a more cautious view on future top line trends in the forecast.
The net profit margin has moved from about 1.25% to about 0.91%, pointing to softer expected profitability in the updated scenario.
The future P/E has risen from a very high level to an even higher level, moving from roughly 551x to roughly 789x. This suggests that a large share of the updated fair value is tied to long-dated earnings expectations.

Experiential retail strategies and proactive leasing are driving stronger tenant demand, higher rents, and increased property traffic across top-performing assets.
Strategic acquisitions and asset dispositions are shifting focus to high-quality, urban malls, enhancing earnings stability and long-term portfolio value.
Heavy debt, exposure to struggling retail markets, and ongoing tenant challenges threaten revenue stability and may limit Macerich's ability to grow earnings and margins.

Catalysts

About Macerich

Macerich is a fully integrated, self-managed, self-administered real estate investment trust (REIT).What are the underlying business or industry changes driving this perspective?

Accelerated leasing activity, including a record pace of new deal signings and strong LOI pipeline, is driving higher leasing spreads and sustained tenant demand; this supports significant NOI and revenue growth as new tenants open and backfilled spaces (especially former Forever 21) achieve higher rental rates.
The focus on experiential and destination-oriented retail (e.g., DICK'S House of Sport, Cheesecake Factory, entertainment concepts) is revitalizing consumer engagement and increasing traffic, positioning the portfolio to benefit from experience-driven spending and capturing higher net margins over time.
Strategic acquisitions like Crabtree Mall in high-growth, supply-constrained markets are expected to meaningfully boost future revenues by increasing permanent occupancy, elevating rent profiles, and leveraging Macerich's operational platform to capture embedded NOI growth.
Ongoing asset dispositions and disciplined portfolio refinement are concentrating capital in top-performing, high-barrier, urban and coastal assets-enhancing pricing power, stabilizing cash flows, and allowing for continued improvements in balance sheet strength and lower interest expense, positively impacting net earnings.
Increasing integration of omni-channel retail, with national brands proactively seeking space in well-located malls for showrooms, logistics, and experiential formats, is fueling ongoing rent growth and reduced vacancy risk, resulting in a higher-quality earnings profile for the long term.

Macerich Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Macerich's revenue will decrease by 0.7% annually over the next 3 years.
Analysts assume that profit margins will increase from -39.2% today to 0.9% in 3 years time.
Analysts expect earnings to reach $9.5 million (and earnings per share of $0.06) by about September 2028, up from $-411.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $20 million in earnings, and the most bearish expecting $-80.9 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 860.7x on those 2028 earnings, up from -11.4x today. This future PE is greater than the current PE for the US Retail REITs industry at 27.2x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.31%, as per the Simply Wall St company report.

Macerich Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The ongoing shift to e-commerce and changing consumer preferences continue to create secular headwinds against traditional mall retail, which may limit long-term foot traffic growth and dampen demand for large-format retail spaces in Macerich's core portfolio, potentially pressuring revenue and NOI growth.
Macerich remains highly leveraged (with net debt to EBITDA at 7.9x) and reliant on significant asset dispositions and refinancing in the next 1–2 years; if capital markets tighten or asset sales are delayed, rising interest costs and refinancing risks could squeeze net margins and negatively impact earnings.
A substantial portion of Macerich's asset base is still concentrated in California and other challenged brick-and-mortar retail markets, increasing exposure to tenant distress, regional economic downturns, and declining property values-which could result in lower occupancy and stagnating or declining revenues.
Despite positive recent leasing momentum, backfilling anchor spaces and converting temporary tenants to permanent status require elevated capital expenditures (CapEx) and tenant allowances; if leasing & redevelopment prove costlier or slower than anticipated, this could compress net margins and slow earnings growth.
Many legacy mall retailers, such as Forever 21 and Claire's, remain financially vulnerable, with continued tenant bankruptcies and store closures raising the risk of rising vacancies, bad debt, and reduced rental collections-directly impacting both revenue stability and NOI predictability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $19.4 for Macerich based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $25.0, and the most bearish reporting a price target of just $15.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.0 billion, earnings will come to $9.5 million, and it would be trading on a PE ratio of 860.7x, assuming you use a discount rate of 9.3%.
Given the current share price of $18.47, the analyst price target of $19.4 is 4.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Macerich?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Experiential Retail Trends Will Revitalize Urban Leasing