UBS sees 50% upside for Kimco Realty after sell-off

Real estate investment trust Kimco Realty (KIM) could have significant upside after its stock dropped more than 10% year-to-date, according to a March 11 bullish note from UBS.

UBS analyst Michael Goldsmith set a $30 price target, implying a 50% upside from Kimco’s $20.62 closing price on March 11. “Recent tenant bankruptcies were expected, and KIM sees them as opportunities to reclaim space,” Goldsmith wrote in the report.

He added, “KIM believes it is well-positioned due to all-time high occupancy, strong tenant retention, and essentially no new supply.”

Suburban strength

According to UBS analysts, families that moved to the suburbs during Covid have largely stayed, shoring up demand for Kimco’s shopping centers.

Goldsmith sees additional upside in replacing weaker tenants — like Party City, which relies on seasonal sales — with more stable grocery store anchors that bring in consistent foot traffic.

“With its balance sheet improvement complete, KIM is self-funding with strong dividend coverage,” Goldsmith added.

He also downplayed concerns over tariffs, arguing that Kimco’s core demographic — middle- and high-income earners — would likely be less affected.

Not only that, recent tenant bankruptcies have created opportunities for Kimco to lease out space at market rates, increasing rental income, Goldsmith noted.

UBS projects Kimco’s dividend yield will average 4.9% this year.

Financial setback may be temporary

In its latest 2024 earnings report, Kimco posted $375 million in net income, marking a 50% decline from the previous year.

The drop was largely due to the company not replacing earnings from its 2023 investment in grocery chain Albertsons (ACI), as well as property devaluations on two lots.

Following the financial disclosure on Feb. 21, Scotiabank cut its price target to $24 on March 3, sending shares lower.

Despite recent setbacks, UBS remains bullish, citing Kimco’s ability to raise rents by replacing lower-paying tenants with higher-value chains.

“At Waterford Town Center in Orlando, FL, KIM is replacing Joann’s $12/sq ft lease with a new tenant at ~$25/sq ft,” Goldsmith highlighted.

Kimco’s largest markets include Baltimore, New York, Los Angeles, Miami, Houston, and Orlando.