Jefferies Starts Sun Communities (SUI) at Buy

Jefferies analyst Peter Abramowitz initiates coverage on Sun Communities (NYSE: SUI) with a Buy rating and a price target of $160.00.

The analyst said: "SUI has underperformed ELS/resi peers since the '21 peak, which we attribute to: 1) Lack of earnings growth in '23 & '24 (core FFO/sh -3.6% and +0.2%), largely due to rate headwinds; and 2) Operational hiccups, as the company cut guidance several times on its UK portfolio in '23. However, with short-term rates coming down (11% of debt variable rate) and $357M in assets sold YTD to de-lever, we expect these headwinds to soften in '25, and note SUI is also taking steps to reduce reliance on home sales in its UK business (45% of expected UK NOI in '24). Combined with a solid supply/demand backdrop, we forecast a +5.4% FFO/sh CAGR through '26 (consensus +5.7%). We think a return to MSD FFO/sh growth in '25 will help the stock (17.6x FFO) re-rate more in line with ELS (23.1x) and ahead of Resi peers (18.7x) with lower growth prospects (+4.4% wtd avg FFO/sh CAG, '24-'26E)."

For an analyst ratings summary and ratings history on Sun Communities click here. For more ratings news on Sun Communities click here.

Shares of Sun Communities closed at $136.07 yesterday.

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