SPG - Simon Property Group: Further Stock Price Recovery Is Uncertain

2024-06-28 17:22:30 ET

Summary

• The slowing of interest rate declines may stop the stock price recovery in its tracks for at least months to come.
• Despite potential challenges, the company's diversification, size, and property locations may continue to provide satisfactory investment performance.
• Previous earnings gains were at least partially fueled by lower vacancy rates and inflation protection.  Those influences are now lower than they were, which may lead to lower earnings growth.
• The first quarter earnings comparison was largely fueled by a one-time gain.  This makes the first quarter earnings comparison in the next fiscal year tough.
• Simon Property Group CEO's health concerns may lead to unacceptable risks for conservative income investors.

The decline in interest rates that has fueled an interest in REITs like Simon Property Group, Inc. ( SPG ). But that trend, in general, has paused. That pause will likely continue until the Federal Reserve feels comfortable resuming the downtrend. For the rest of the current fiscal year, that appears to be unlikely. Therefore, the stock may be caught in a relative trading range for at least the rest of the year and maybe longer.

Lastly, the first quarter was off to a great comparison and guidance was raised. But that all happened because of a onetime sale that implies a tough comparison in the first quarter of the next fiscal year. That first quarter is coming up fast and may well be reflected in stock price action as the first quarter gets closer because the stock market looks forward....

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