Citi lowers ProLogis stock price target to $140 on trade policy uncertainty

Prologis (PLD) reported mixed Q2 2025 results, with revenue surpassing expectations but EPS falling short. Citi subsequently lowered its price target to $140 from $150, while maintaining a Buy rating, citing a reduced valuation multiple due to uncertainty from unresolved trade policies impacting tenant decision-making. Conversely, UBS maintained its Buy rating and $120 price target, highlighting strong Q2 performance and an extensive leasing pipeline, though KeyBanc reiterated its Sector Weight rating, noting a potentially slower second half of 2025 for PLD amidst broader industrial real estate market uncertainties.

Analysis

ProLogis (PLD) presented a mixed operational picture in its second-quarter 2025 results, characterized by a revenue beat of $2.04 billion against a $2.01 billion forecast, but an earnings per share miss at $0.61 versus an expected $0.69. Analyst reactions reflect this duality. Citi maintained its Buy rating but reduced its price target to $140 from $150, attributing the change to a lower target AFFO multiple of 31x (down from 33x) due to "uncertainty from unresolved trade policies" impacting tenant decision-making. Despite this, Citi slightly raised its 2025 FFO estimate to $5.78, indicating the concern is more about valuation risk than immediate operational failure. In contrast, UBS held its Buy rating and $120 price target, emphasizing a strong FFO per share of $1.47 (ex-promote) that surpassed the $1.42 consensus and a robust leasing pipeline. ProLogis itself adjusted its 2025 FFO guidance to a range of $5.80-$5.85, a slight tightening and raising of the midpoint from the prior $5.70-$5.86. However, KeyBanc's Sector Weight rating underscores caution, noting that the guidance increase was smaller than the quarterly beat, suggesting a potential slowdown in the second half of 2025 for the industrial real estate market.

Key Decisions for Investors

• Investors should weigh the company's solid operational metrics, including a revenue beat and strong FFO performance, against the macroeconomic headwinds of trade policy uncertainty, which prompted Citi to lower its valuation multiple for the stock.
• Given the company's 3.7% dividend yield and 15-year history of payments, income-focused investors might consider the stock a stable holding, but should monitor tenant leasing trends as a key indicator of future performance.
• The cautious outlook from KeyBanc and the modest guidance update from the company suggest that while near-term fundamentals are stable, upside potential may be limited in the second half of 2025, warranting a close watch on future earnings reports for signs of deceleration.