Realty Income Slides on Rate Pressure, but Analysts See Up to 27% Upside

Realty Income shares have fallen 9.1% over the past month and 5.26% over three months, pressured by rising interest rates as the 10-year Treasury yield touched 5.01%, along with a $54.2 million real estate impairment and leverage that ticked up to 5.4 times net debt-to-EBITDAre in the second quarter. Shares closed near $56.63.

Despite the decline, Wall Street's consensus price target sits at $68.16, and the Street-high target of $72 from analysts at Bank of America and UBS implies roughly 27% upside from current levels. The real estate investment trust continues to pay a monthly dividend yielding about 5.6%, backed by more than 670 consecutive monthly payouts and 115 straight quarterly increases.

Underlying fundamentals remain steady: second-quarter adjusted funds from operations grew 3.8% year over year to $1.09 per share, full-year guidance was raised to $4.44 to $4.45 per share, occupancy sits near 99%, and the company recently announced a $6 billion hyperscale data center joint venture with Cloud Capital.