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Let’s talk about the popular Alexandria Real Estate Equities, Inc. (NYSE:ARE). The company’s shares saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Alexandria Real Estate Equities’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What’s the opportunity in Alexandria Real Estate Equities?
According to my valuation model, Alexandria Real Estate Equities seems to be fairly priced at around 0.8% below my intrinsic value, which means if you buy Alexandria Real Estate Equities today, you’d be paying a fair price for it. And if you believe that the stock is really worth $134.78, then there’s not much of an upside to gain from mispricing. In addition to this, Alexandria Real Estate Equities has a low beta, which suggests its share price is less volatile than the wider market.
What does the future of Alexandria Real Estate Equities look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Alexandria Real Estate Equities. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, ARE appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ARE for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on ARE should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Alexandria Real Estate Equities. You can find everything you need to know about Alexandria Real Estate Equities in the latest infographic research report. If you are no longer interested in Alexandria Real Estate Equities, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.