Solid Growth for Regency Centers

We maintain our Buy rating on the shares of Regency Centers (REG - Analyst Report). Due to recent share price declines, the company’s valuation remains compelling, and we think grocery-anchored retail companies will fare well, even as discretionary retail spending subsides in the coming quarters.

REG has a solid balance sheet, and is well-positioned to take advantage as private developers have difficulty obtaining financing for new projects. The biggest threat to REG is the continued slowdown in consumer spending, which could continue to weigh on strip center operators throughout 2008.

At 12.8x our 2008 FFO estimates, Regency is trading at a 2% discount to sector averages. We think REG will continue to see earnings through the latter part of 2008 and are projecting about 10% FFO growth, which would be good considering the current state of the economy and continued pressure on retailers. We are setting our six month price target at 14.0x 2008 FFO estimates or $64.00 per share.

Read the full analyst report on REG