EPR Properties、NetShareIT升级为Raymond James的Strong Buy

Raymond James upgraded EPR Properties (NYSE:EPR) and NetSTREIT (NYSE:NTST) to Strong Buy from Outperform analyst RJ Milligan doesn't believe the underperformance of the two net-lease REITs vs. the subsector year-to-date is warranted.

For the net-lease sector, the analyst said lower rates and higher stock prices have improved the cost of capital, which should lead to better accretion and higher out-year estimates.

For EPR (EPR) and NetSTREIT (NTST), "we believe the bulk of the underperformance is being driven by headline risk, not financial risk," Milligan wrote in a note to clients.

Even though the two companies have a higher cost of capital, which is an impediment to sparking higher external growth, he doesn't see the YTD underperformance as justified.

"As the rest of the sector sees inflows and higher multiples, we expect EPR and NTST to start to close the valuation gap (which continues to widen)," Milligan said.

Raymond James's Strong Buy rating on both EPR (EPR) and NetSTREIT (NTST) contrasts with the SA Quant rating of Hold on the two stocks and aligns with the average SA Analyst ratings of Buy. Meanwhile, the average Wall Street rating on EPR is Hold and on NTST is Buy.

In Wednesday premarket trading, EPR Properties (EPR) stock rose 0.6%, while NetSTREIT (NTST) is unchanged at $16.36.

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