Truist cuts Americold Realty Trust target to $24, keeps Buy rating

Truist Securities lowered its price target on Americold Realty Trust (COLD) from $27 to $24, maintaining a Buy rating, after the company's Q1 2025 earnings prompted a revision of AFFO estimates to $1.42 per share for 2025 and $1.53 for 2026, aligning with Americold's guidance range. The reduced target reflects a 5-year DCF analysis, while other firms like Raymond James and Evercore ISI also adjusted their targets downward to $25 due to lowered full-year guidance amid macroeconomic concerns, despite a maintained dividend of $0.23 per share.

Analysis

Truist Securities has revised its price target for Americold Realty Trust (NYSE:COLD) downwards to $24.00 from $27.00, while notably maintaining a Buy rating. This adjustment follows Americold's first-quarter 2025 earnings report, which led Truist to lower its adjusted funds from operations (AFFO) forecasts to $1.42 per share for 2025 (down from $1.52) and $1.53 per share for 2026 (down from $1.62). These revised estimates align with Americold's own 2025 AFFO guidance of $1.42 to $1.52 per share, implying an anticipated 4% year-over-year AFFO decline in 2025, followed by a projected 8% growth in 2026. The stock is currently trading near its 52-week low at $16.63, having returned -29.36% over the past six months. Americold's Q1 2025 results missed expectations, with an EPS of -$0.06 against a forecasted $0.05, and revenue of $628.98 million versus a projected $667.18 million. Despite these misses and a challenging macroeconomic environment leading to downward revisions in full-year guidance, the company maintained its quarterly dividend at $0.23 per share, a 5% year-over-year increase, contributing to a 5.53% dividend yield. Other analysts, including Raymond James and Evercore ISI, have also adjusted their price targets to $25, citing weaker inventory builds and economic uncertainty, though Raymond James maintained an Outperform rating and Evercore ISI noted Q1 AFFO exceeded their estimates. Truist's $24 price target is derived from a DCF analysis valuing the company at $23.56, based on a 2.8% perpetuity growth rate, an 11% discount rate, and a 17x 2025 AFFO multiple. Their model assumes 1% SSNOI growth for 2025, driven by an 8.6% increase in warehouse services, despite a 0.9% decline in rent and storage, alongside $130 million in acquisitions. InvestingPro data indicates expectations for net income growth and a return to profitability this year for Americold.

Key Decisions for Investors

• Investors should weigh the near-term headwinds reflected in lowered AFFO guidance and price targets against the maintained 'Buy'/'Outperform' ratings and the stock's current valuation near its 52-week low, which analyst targets suggest offers potential upside.
• The current dividend yield of 5.53%, supported by a recent 5% increase, may appeal to income-oriented investors, especially considering InvestingPro's expectation of a return to profitability and net income growth for the company this year.
• Monitor key operational metrics such as same-store net operating income, particularly the performance of the warehouse services segment (projected for 8.6% growth), and the execution of acquisition strategies, as these are critical to achieving the projected 8% AFFO growth in 2026.
• Given the mixed signals of Q1 earnings miss, lowered guidance due to macroeconomic concerns, yet positive analyst ratings and long-term growth projections, investors should carefully assess their risk tolerance and investment horizon before initiating or adjusting positions in COLD.