UPDATE: UBS Downgrades DDR Corp. (DDR) to Sell

UBS downgraded DDR Corp. (NYSE: DDR) from Neutral to Sell with a price target of $14.50. Analyst Jeremy Metz thinks execution risks are rising.

"Execution risks around what we expect to be another +$1B of asset sales, a lack of earnings growth through 2018, and a more challenging big box leasing environment lead us to believe shares of DDR could re-test recent lows as investors seek better earnings growth/less risk elsewhere in the sector as we move later into the cycle," said Metz.

The analsyt added, "Uncertainty has followed DDR's most recent CEO change, as new mgmt painstakingly reviews the portfolio/internal processes before outlining a path to growth (and timeframe to get there). Per conversations with mgmt, we expect some clarity with Q4 earnings. We're also expecting plans for another +$1B of dispositions, which follow +$5B of sales since 2011. Longer term, exiting non-core assets/reducing Puerto Rico exposure and taking leverage down are positives; however transformation comes at a cost with little to no earnings (and possibly dividend) growth forecast through 2018 while peers largely wrapped up similar transformation activities in 2014/2015. We estimate a sector low 3% 2017-19 earnings CAGR vs peers of +6%. Furthermore, we see enhanced execution risks given shrinking buyer pools and softening pricing for noncore assets, as evidenced by recent broker data and conversations with market contacts."

For an analyst ratings summary and ratings history on DDR Corp. click here. For more ratings news on DDR Corp. click here.

Shares of DDR Corp. closed at $15.47 yesterday.

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