Prologis Gains 10.2% in a Month: Will it Continue to Rise?

Shares of Prologis Inc. PLD have gained 10.2% in a month, outperforming the industry's growth of 5.5%.

This industrial real estate investment trust (REIT) targets investments in distribution facilities for customers who are engaged in global trade and depend on the efficient movement of goods through the global supply chain.

Last month, Prologis reported first-quarter 2025 core funds from operations (FFO) per share of $1.42, outpacing the Zacks Consensus Estimate of $1.38. This compared favorably with the year-ago quarter’s figure of $1.28. The quarterly results reflected a rise in rental revenues and healthy leasing activity.

Let us decipher the possible factors behind the surge in the stock price.

In a rising e-commerce market, companies are making immense efforts to improve supply-chain efficiencies, propelling demand for logistics infrastructure and efficient distribution networks. Given Prologis’ solid capacity to offer modern logistics facilities in some of the busiest distribution markets across the globe, it is well-poised to bank on this trend.

The solid demand for Prologis’ strategically located facilities has driven healthy operating performance over the past several quarters. In the first quarter of 2025, 65.1 million square feet of leases commenced in the company’s owned and managed portfolio.

Prologis continues to bolster its presence in high-barrier, high-growth markets through strategic acquisitions and development activities. In the first quarter of 2025, the company’s share of acquisitions amounted to $811 million. For 2025, it anticipates acquisitions of Prologis share to be between $750 million and $1.25 billion. Development starts are expected in the range of $1.5-$2.0 billion.

Moreover, the data center industry is currently experiencing significant growth, driven by the demands of the evolving needs of today’s digital economy. To capitalize on this growing opportunity, Prologis is focusing on both warehouse conversions and ground-up developments.

Prologis maintains a healthy balance sheet position with ample flexibility that poises it well to capitalize on long-term growth opportunities. As of March 31, 2025, the company had a total available liquidity of $6.52 billion. Its credit ratings as of March 31, 2025, were A2 (Outlook Positive) from Moody’s and A (Outlook Stable) from Standard & Poor’s, enabling the company to borrow at an advantageous rate.

Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Prologis remains committed to that. In the last five years, it has increased its dividend five times, and its five-year annualized dividend growth rate is 13.71%. Given the company’s solid operating platform and decent financial position compared with the industry, this dividend distribution is expected to be sustainable over the near term.

The above-mentioned factors are expected to continue the positive trend in the stock.

Key Risks for Prologis

The recovery in the industrial market has continued for a long time, and the growth of e-commerce sales is likely to stabilize to some extent in the upcoming quarters. Therefore, any robust performance is unlikely in the near term.

Analysts seem pessimistic about this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2025 FFO per share has declined marginally over the past month to $5.69.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI’s 2025 FFO per share has moved one cent northward to $2.34 over the past week.

The consensus estimate for WPC’s 2025 FFO per share has been revised upward by 1% to $4.88 over the past month.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research