The Macerich Company (MAC) PT Raised to $20 at Compass Point

Compass Point analyst Floris van Dijkum raised the price target on The Macerich Company (NYSE: MAC) to $20.00 (from $18.00) while maintaining a Buy rating.

The analyst commented: "We are raising our PT for MAC to $20 due to strong recent performance by the mall sector. We continue to be out of consensus in recommending MAC as we believe the market is vastly under-valuing MAC's high-end mall franchise. Malls are in the sweet spot with negative supply growth and continued solid tenant leasing demand. Retailers make vastly superior operating margins through store sales and typically generate their highest sales in 'A' malls, like those owned by MAC. Despite carrying more leverage than desired, MAC's strong expected underlying NOI growth, much of it contractual due to its $70 million SNO pipeline as well as annual fixed rent bumps of 3% which should reduce leverage absent any asset sales or debt restructuring. Yet MAC management has indicated it will actively look to do both as it seeks to reduce total debt by $1 billion by year-end. Ironically, MAC's higher leverage could be a positive for those investors wanting to play interest rate cut beneficiaries. We remain a lonely Buy rating on a stock that has gained 1.8% YTD with six bearish recommendations which suggests contrarian investors stand to make significant alpha should events plan out as we expect."

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