Citi Resumes Prologis Coverage
Citi resumed coverage of Prologis ($PLD) with a Buy rating and $145 price target yesterday. Meanwhile, analysts are warning investors about "The $140 mistake" they don't want to make in 2026, suggesting caution around current valuation levels. Prologis Spain also announced a solar deal with ACCIONA for 10.5 MWp as part of their ESG initiatives.
The analyst consensus for Prologis aligns with Citi's positive outlook, with a "Moderate Buy" rating based on the assessments of over 20 analysts. Price targets from various firms range from as low as $121 to a high of $157, with the average sitting around $140-$141. This optimism follows a strong 2025 where the company signed a record 228 million square feet of leases. Prologis is guiding for core funds from operations (FFO) to be between $6.00 and $6.20 per share in 2026, an increase from the $5.86 per share reported for 2025. However, concerns about valuation persist, with the company's P/E ratio trading near its three-year high. Potential headwinds include projections for weaker rent growth and risks associated with shifts in consumer spending habits, which could impact industrial tenants. Prologis is actively expanding into digital infrastructure to fuel future growth. The company plans for data centers to account for approximately 40% of its projected $4 billion to $5 billion in new development starts in 2026. The solar agreement with ACCIONA is part of a much larger environmental, social, and governance (ESG) strategy. Prologis has a validated commitment to achieve net-zero greenhouse gas emissions across its value chain by 2040. This initiative is a step towards the company's goal of installing 1 gigawatt of solar and energy storage capacity by 2025, having already surpassed 500 megawatts in 2023. The broader commercial real estate market outlook for 2026 is one of stabilization and recovery. The industrial and logistics sector, where Prologis is a global leader, is expected to remain a resilient and active segment, driven by e-commerce and supply chain needs.
