Jefferies Sees Upside in Realty Income (O) as Net Lease REIT Valuations Remain Depressed

Realty Income Corporation (NYSE:O) is included among the 10 No-Brainer Dividend Stocks to Buy.

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On June 1, Jefferies initiated coverage of Realty Income Corporation (NYSE:O) with a Buy rating and a $69 price target, compared with its previous target of $75. The firm began coverage of retail net lease real estate investment trusts with a favorable view of the sector. According to the analyst, the successful execution of investment pipelines could help drive a re-rating toward historical valuation multiples.

In a research note, Jefferies said the net lease sector is trading at the third-largest discount to its 10-year average valuation within the REIT space. The firm noted that net lease REITs are being grouped with “the same cohort as secular challenged sectors” such as office and lab properties, despite what it described as “intact fundamentals.”

Earlier, on May 13, Mizuho lowered its price recommendation on Realty Income to $66 from $68. It reiterated a Neutral rating on the stock. The firm pointed to ongoing macroeconomic and interest rate uncertainty affecting triple-net real estate investment trusts.

Realty Income Corporation (NYSE:O) is a real estate investment trust focused on acquiring, owning, and managing freestanding commercial properties. These properties are leased under long-term net lease agreements to a diversified group of tenants, including investment-grade, investment-grade-equivalent, and other operators.

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