Benzinga | Apr 16, 2021 10:35AM EDT

What Are The 4 Catalysts For Simon Property Group Stock Upgrade?

While occupancy and renewal spreads could remain under pressure in the near term, Simon Property Group Inc (NYSE:SPG) appears poised to benefit from retailer investments, pent-up consumer demand, lower bad debt and external growth opportunities, according to Jefferies.

The Simon Property Group Analyst: Linda Tsai upgraded the rating for Simon Property Group from Hold to Buy, while raising the price target from $112 to $130.

The Simon Property Group Thesis: The pandemic offers the company more growth opportunities than it had in the pre-COVID-19 era, both as an industry consolidator and innovator given its significant capital, Tsai said in the upgrade note.

The current backdrop favors discretionary retailers in malls, the analyst noted. She mentioned four aspects of this:

* Apparel has gained momentum and around 50% of Simon Property Group's mall retail is apparel.

* The retailer landscape is strengthening.

* Store openings have exceeded store closures and retailers "require physical stores to improve margins with in-store fulfillment for digital sales."

* "As vaccination rates climb, we expect improving mobility," Tsai added.

Mall traffic was the hardest hit by the pandemic and a strong recovery can be expected in the back half of 2021, the analyst said.

SPG Price Action: Shares of Simon Property Group had risen by 2.43% to $117.35 as of Friday morning.

(Photo: Simon Property Group)