Kilroy Realty's share value climbed upward on a Friday.
Friday was a profitable day for investors in commercial real estate company Kilroy Realty (KRC, up 1.23%). An analyst upgrade, coupled with a price-target boost, propelled Kilroy's stock, closing the trading day more than 4% higher. This outperformed the growth of the benchmark S&P 500 index, which climbed by a little over 1%.
The new bull calls for a buy
Prior to the market opening, analyst Anthony Paolone from JPMorgan Chase upgraded Kilroy's shares from neutral to overweight (buy). Paolone also increased his price target for the stock to $49, marking an increase of $4 per share and representing a 21% upsurge from the stock's last closing price.
Reports suggest that Paolone highlighted several crucial West Coast markets for Kilroy Realty in his latest research note as showing potential for a resurgence. Although he acknowledges that the company is grappling with high vacancy rates, Paolone remains optimistic about the trend of tech companies encouraging their employees to return to in-person work in offices. This is particularly pertinent to California, where the tech industry is prevalent.
Paolone further believes that, following the COVID-19 pandemic, the company is now undervalued based on its financials, warranting the newly recommended buy position.
It's inexpensive at a cost
Personally, I have reservations about the future of commercial real estate businesses. While there's evident movement back to conventional office work environments, it appears to merely be a transitional phase rather than a durable trend. Work-from-home and hybrid work arrangements seem to be here to stay, and they are likely to continue influencing the market as well as the core operations of companies like Kilroy.
Despite Anthony Paolone's confidence in Kilroy Realty's potential for growth, some investors may be cautious about committing their money into the finance sector, given the uncertainty surrounding the long-term impact of remote work on commercial real estate. Meanwhile, Paolone's bullish view on Kilroy's shares has attracted interest from those looking for new investing opportunities in the sector, believing that the company's current price is undervalued considering its financial performance.
