UPDATE: Stifel Starts Parkway Properties (PKY) at Sell

October 18, 2016 7:22 AM EDT
Get Alerts PKY Hot Sheet
Price: $21.70 -3.51%

Rating Summary:
    2 Buy, 14 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 29 | Down: 29 | New: 23
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(Updated - October 18, 2016 8:57 AM EDT)

Stifel initiated coverage on Parkway Properties (NYSE: PKY) with a Sell rating and a price target of $17. Analyst John W. Guinee is cautious on the Houston market.

"We are initiating coverage of Parkway, Inc. (initially called HoustonCo) with its 8.7mm SF, 100% Houston portfolio with a Sell rating. Most valuation metrics lead us to believe the shares are overvalued," said Guinee.

"Our net asset value (NAV) estimate is $16.72 – $18.18 per share, based upon a 9.5% - 10.0% cap rate range. Our 2017 FFO/FAD/share estimates of $2.17/$1.12 and trade at 8.6x/16.7x the current share price. PKY currently trades at an implied NOI cap rate of 9.3% and a total enterprise value of roughly $182/SF relative to our gross and adjusted replacement cost estimates of $322/SF and $204/SF," continued the analyst.

Guinee added, "Based on our 'on the ground' discussions, we think: 1) the Houston office market is a long way from bottoming; and 2) hard asset investors will stay away until they can effectively touch the bottom of the oil filled pool and underwrite rental rates."

For an analyst ratings summary and ratings history on Parkway Properties click here. For more ratings news on Parkway Properties click here.

Shares of Parkway Properties closed at $18.67 yesterday.

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