Evercore ISI Double Upgrades Vornado Realty Trust (VNO) to Outperform

Evercore ISI analyst Steve Sakwa upgraded Vornado Realty Trust (NYSE: VNO) from Underperform to Outperform with a price target of $38.00 (from $32.00).

The analyst comments "While the stock is up 17% YTD and has outpaced the REIT index (+9%) since the start of the year, most of that outperformance occurred post Q2 results in early August and we believe that there are several additional catalysts over the next 6 to 12 months that could allow the stock to keep outperforming the peers. Those catalysts include: 1. It’s very likely that VNO is either leasing or selling 770 Broadway to a high-credit tenant at a valuation that’s well above the “implied” value of just $334psf that it’s NYC office portfolio currently trades at today. This deal would help validate the value of NYC office buildings and reduce the near-term risk of backfilling the recent Meta lease expiration. 2. PENN 2’s leasing activity is strong which is paired with an overall growing pipeline of 2.6msf for the NY mkt. A few large tenants are eyeing this asset and something could transpire before year-end. 3. With a decline in the 10-yr treasury & SOFR curve, VNO’s higher exposure to floating rate debt provides upside to our ‘25 FFO est if current Fed cut expectations remain in place. 4. As PENN 2 moves from the development stage to the “in service” stage in ’25, it creates an FFO drag of 22¢ a share while also depressing our DCF valuation and therefore we believe investors should adjust their valuation and either add back this dilution or focus on 2026 as a more stabilized earnings figure which we’ve chosen to do. Based on these factors, we are raising our PT from $32 to $38 and upgrading the stock from Underperform to Outperform."

For an analyst ratings summary and ratings history on Vornado Realty Trust click here. For more ratings news on Vornado Realty Trust click here.

Shares of Vornado Realty Trust closed at $32.94 yesterday.

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