Mizuho lifts Macerich stock rating, cuts price target to $18

Mizuho Securities upgraded Macerich (MAC) to Outperform from Neutral, lowering the price target to $18 from $22, citing an attractive risk/reward balance despite the stock's volatility and year-to-date underperformance. The upgrade is based on Macerich's progress under new leadership, exceeding objectives in leasing, asset sales, and leverage reduction, though short-term obligations still exceed liquid assets. First quarter 2025 earnings revealed a larger-than-expected loss per share, but revenue exceeded expectations, and Funds From Operations met Truist Securities' optimistic forecast, with Truist maintaining a Buy rating and a $19 price target, highlighting strong leasing activity.

Analysis

Mizuho Securities has upgraded The Macerich Company (MAC) to Outperform from Neutral, adjusting the price target to $18 from $22, reflecting an improved outlook despite the reduction. This upgrade is attributed to Macerich's progress under new leadership, with the company surpassing objectives in its 'Path Forward Plan' initiated in Spring 2024, particularly in leasing, asset sales, and leverage reduction, which has significantly mitigated its risk profile. Currently trading at $16.43 with a 4.14% dividend yield, MAC's stock presents a compelling risk/reward balance, according to Mizuho, supported by its valuation appearing at a considerable discount to historical levels and peers, though InvestingPro’s Fair Value suggests slight overvaluation. The stock's high beta of 2.14 and year-to-date underperformance of -15.87% underscore its volatility. Recent Q1 2025 results showed a larger-than-expected EPS loss of -$0.20 (missing the -$0.0747 forecast), but revenues of $249.22 million significantly beat the $206.71 million expectation. Funds from operations (FFO) per share met Truist Securities' optimistic forecast at $0.33. Truist maintained a Buy rating with a $19.00 price target, citing strong leasing activity, with 2.6 million square feet signed in Q1 (a 156% YoY increase) and an expanded Signed Not Yet Open (SNO) pipeline of $80 million. Despite these operational strengths, InvestingPro data indicates Macerich's short-term obligations exceed its liquid assets, with a current ratio of 0.44, highlighting an ongoing need for prudent balance sheet management.

Key Decisions for Investors

• Investors with a higher risk tolerance may consider Macerich (MAC) given the analyst upgrade, operational improvements, and perceived valuation discount, but should be prepared for significant stock price volatility as indicated by its high beta.
• Monitor Macerich's progress on its 'Path Forward Plan', particularly improvements in its current ratio and continued deleveraging efforts, as these are critical for de-risking the investment.
• Evaluate the conflicting signals between analyst optimism, strong revenue and FFO performance, and the recent EPS miss and InvestingPro's fair value assessment, before making investment decisions.