- Simon Property Group (NYSE:SPG) stock gains 1.4% in premarket trading after Argus analyst Angus Kelleher-Ferguson upgrades the mall owner's shares to Buy from Hold as the company's fundamentals are improving more quickly than expected.
- Kelleher-Ferguson is optimistic about Simon's (SPG) e-commerce investments, including its joint venture with Rue Gilt Groupe, and its ownership stakes in troubled retailers and tenants JCPenney, Forever 21, Eddie Bauer, Brooks Brothers, and Lucky Brand.
- "SPG's equity infusions have helped these troubled retailers to avoid bankruptcy filings, prevented empty storefronts at SPG malls, and provided SPG with exposure to retailer e-commerce sites, thereby diversifying the company beyond physical retail," the analyst writes.
- Furthermore, the company continues to benefit from geographic diversification, scale, and a high-quality portfolio, he said.
- With the acquisition of Taubman and its growing omni-channel presence, "Simon is exiting the pandemic with a stronger competitive position," Kelleher-Ferguson said.
- His Buy rating is more optimistic than the Neutral Quant rating, which assigns a poor grade for growth but a high grade for profitability. The Buy rating aligns with the average SA Author rating of Bullish (2 Very Bullish, 5 Bullish, 2 Neutral, 1 Bearish).
- While SA contributor Chuck Walston is overall bullish on the stock, he does see some causes for concern.