Innovative Industrial Properties (IIPR – Research Report), the Real Estate sector company, was revisited by a Wall Street analyst yesterday. Analyst Merrill Ross from Compass Point downgraded the rating on the stock to a Sell and gave it a $50.00 price target.
Merrill Ross has given his Sell rating due to a combination of factors impacting Innovative Industrial Properties. The company is facing significant challenges with several tenants who are in default, which could affect future earnings. The defaults are likely to lead to a lengthy and costly process of regaining control of the properties and finding new tenants, potentially at lower rental rates. This situation is expected to exert pressure on the company’s dividend and net asset value, both critical to supporting the stock price.
Additionally, the company’s largest tenant in default, 4 Front Ventures, has properties that may require redevelopment to be profitable, further complicating the situation. Other tenants, such as Gold Flora and TILT Holdings, have also faced financial difficulties, leading to uncertainties about future rental income. Given these challenges, Ross believes the company’s equity is currently unattractive, prompting a downgrade to a Sell rating with a price target of $50 per share.
In another report released on March 17, Piper Sandler also maintained a Sell rating on the stock with a $60.00 price target.
Based on the recent corporate insider activity of 8 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of IIPR in relation to earlier this year.