How Margin Pressure and Lowered 2025 Guidance at Prologis (PLD) Has Changed Its Investment Story

• Prologis recently revised its 2025 earnings guidance downward, expecting diluted earnings per share between US$3.00 and US$3.15 compared to previous estimates of US$3.45 to US$3.70, following the release of its second-quarter results for 2025.
• While second-quarter sales and revenue grew year-on-year, a significant decrease in net income and profit per share indicates rising costs or margin pressure despite robust topline growth.
• To assess the impact of the lowered earnings guidance on the investment outlook, we'll analyze how margin pressure could affect Prologis' future earnings narrative.

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Prologis Investment Narrative Recap

To be a Prologis shareholder today, you need to believe in continued tenant demand for premium logistics assets despite current macro challenges and margin pressures. The recent downward revision in 2025 earnings guidance highlights that while topline growth remains solid, rising costs and decelerating profit margins are the most crucial near-term risks, directly overshadowing the company’s ability to capture a rapid rebound in leasing activity. For now, the impact is material as it tempers optimism around a swift recovery in earnings momentum and rental growth.

The latest earnings announcement is directly relevant to these concerns: while sales and revenue rose year-on-year for the second quarter, net income dropped from US$861.35 million to US$571.23 million and diluted EPS declined from US$0.92 to US$0.61. This aligns with management's comments on persistent margin pressure and the shifting balance between higher revenue and rising expenses, a key issue for investors monitoring Prologis' ability to sustain operating performance while facing slower leasing and macro uncertainty.

However, if macro trends worsen and leasing activity fails to accelerate as hoped, investors should be aware that ...

Read the full narrative on Prologis (it's free!)

Prologis' outlook anticipates $9.5 billion in revenue and $3.5 billion in earnings by 2028. This scenario assumes a 2.1% annual revenue growth rate and a $0.1 billion increase in earnings from the current $3.4 billion.

Uncover how Prologis' forecasts yield a $119.15 fair value, a 9% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members offered 7 fair value estimates for Prologis, ranging from US$104 to US$136.11 per share. While investor fair value opinions vary widely, recent margin pressure and EPS guidance cuts bring renewed attention to earnings quality and future growth expectations.

Explore 7 other fair value estimates on Prologis - why the stock might be worth 5% less than the current price!

Build Your Own Prologis Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Prologis research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Prologis research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Prologis' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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