Shares of Taubman Centers Inc., operator of Westfarms and other U.S. malls, have risen too far ahead of what could be a disappointing retail season, an analyst said Friday as he downgraded the company.
Oppenheimer analyst Samit Parikh downgraded the Bloomfield Hills, Mich., company to “underperform” from “perform.”
Shares have risen 18 percent since early November, compared with an 8 percent increase in the RMZ, a real estate investment trust index, he said. As a result, the company’s stock appears to be “too richly valued.”
At 11:30 a.m., Taubman’s shares were up 37 cents at $36.21.
Parikh said investors should pare their exposure to Taubman ahead of “potentially disappointing holiday sales numbers.”
Taubman’s “top-quality portfolio and strong balance sheet with manageable near-term debt maturities deserve a premium valuation,” Parikh said. But its shares are the most expensive in the mall sector, he said.
Concerns about sales by mall tenants could undercut the value of Taubman shares, Parikh said.
“While the company has noted improving trends during the fourth quarter, the holiday sales season is still in its early stages and we’re not convinced that sales will be robust enough to meet investor expectations,” he said.
A better-than-expected sales season is reflected in the stock’s current price, he said. (AP)
