Vornado Flips To Loss in 3Q; Street Sees 29% Upside

Vornado Realty Trust reported a loss of $0.09 per share in 3Q as compared to the earnings of $0.28 per share in the year-ago quarter. Analysts had expected the company to post earnings of $0.60 per share.

The real estate investment trust (REIT) reported 3Q revenues of about $364 million, which decreased 21.9% year-over-year but came ahead of the Street estimates of $362.6 million. Shares rose less than 1% in Monday’s extended market session.

Vornado Realty (VNO) collected about 93% of rent due from its tenants, which comprised of 82% of rent due from its retail tenants and 95% from office tenants. The company said “While we believe our tenants are required to pay rent under their leases, in limited circumstances, we have agreed to and may continue to agree to rent deferrals and rent abatements for certain of our tenants,” due to COVID-19.

Its adjusted funds from operations (FFO) remained flat at $1.46 per share and exceeded analysts’ estimates by $0.18. (See VNO stock analysis on TipRanks).

On Nov. 3, BMO Capital analyst John Kim reiterated his Buy rating and a price target of $55 (69.2% upside potential). He said “VNO had one of its most active leasing quarters in history dominated by two leases (Facebook and NYU [New York University]). We estimate initial cash rent with Facebook at Farley Place at $109 psf [per square feet].” The analyst added “Despite market conditions, VNO continues to close condo sales at 220 CPS [Central Park South]: $591m in 3Q20 and $939m YTD.”

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 3 Holds, 1 Buy and 2 Sells. The average price target of $42 implies upside potential of about 29.2% to current levels. Shares have dropped 51.1% year-to-date.

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