Mizuho Securities Starts STORE Capital (STOR) at Buy
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Mizuho Securities initiates coverage on STORE Capital (NYSE: STOR) with a Buy rating and a price target of $30.50.
Analyst Haendel St. Juste commented, "We are initiating coverage of STORE Capital (STOR) with a Buy rating and a $30.50 price target. Founded by in 2011, STOR was initially capitalized through funds managed by Oaktree Capital management and IPO’d in 2014. Since then, STOR has been one of the fastest growing Triple Net Lease REITs fueled by its smaller size and “direct origination platform” and willingness to take on and structure around more complicated transactions /investments to generate superior yields / returns. Today, STOR trades at a slight discount to the sector on AFFO (15.6x AFFO multiple vs the Triple NET REIT sector average of 16.3x), and the lowest “PEG” (AFFO multiple vs AFFO growth) ratios in the space due to its aboveaverage earnings growth (1.7x vs 4.5x for the Triple Net sector, or 2.7x excluding VER). That said, higher yield investments do carry a perception of higher risk (suggesting higher discount rate) and we also look for a natural deceleration in STOR’s growth over next couple years as it grows in size and acquisitions have less bottom line impact."
Shares of STORE Capital closed at $27.85 yesterday.
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