J.P. Morgan downgrades Americold Realty Trust, reduces AFFO estimates

J.P. Morgan Securities downgraded Americold Realty Trust from Neutral to Underweight, expressing concerns about overly optimistic future estimates for adjusted funds from operations (AFFO) per share, leading to a revised price target from $17.00 to $15.00.

The analysts lowered their projections for AFFO for 2025, 2026, and 2027 due to discussions with management and the anticipated challenges in the cold storage sector, indicating ongoing adjustments in estimates.

Management indicated potential declines in fixed commitments for 2026, which could negatively affect expected improvements in economic occupancy and revealed that pricing trends may remain subdued, with higher capitalized interest expenses likely by 2026.

Contrary to the downgrade, most sell-side analysts maintain a Buy rating on Americold Realty Trust, while the Quant Rating system categorizes it as a Strong Sell.

Recommendation Rating: Caution on Americold Realty Trust

Americold Realty Trust (NYSE: COLD), an industrial real estate investment trust, witnessed a decline in its stock price following a downgrade by J.P. Morgan Securities. The firm has lowered its rating on the stock from Neutral to Underweight and has also revised its forecasts for adjusted funds from operations (AFFO) per share.

As of late Tuesday morning, COLD was trading at $12.71, marking a 0.86% decrease. The price target has been adjusted downwards from $17.00 to $15.00.

Analysts Michael Mueller and Anthony Paolone expressed concerns, stating, "Despite the stock's poor performance this year, we believe that the 2026 estimates currently held by analysts could be overly optimistic. This adjustment process may serve as a persistent challenge for the stock moving forward."

In their research note, the analysts elaborated on their strategy shift after discussions with company management regarding Americold's messaging at a recent conference. They have revised their projections downward for 2025 and 2026AFFO/share estimates, noting, “We have reduced our 2025 AFFO projection from $1.42 to $1.41, our 2026 projection from $1.48 to $1.29, and our 2027 projection from $1.59 to $1.40. Given the operational intensity of the cold storage sector, we anticipate that our estimates will continue evolving in the short term.”

Furthermore, concerning the core operations of their warehouses, management indicated potential marginal declines in fixed commitments for 2026, which may negatively impact the anticipated economic occupancy improvements factored into prior forecasts. Additionally, it appears that pricing trends could remain subdued in the near future. The analysts also noted the possibility of higher capitalized interest expenses becoming more apparent by 2026.

This downgrade stands in contrast to the general sentiment among sell-side analysts, who predominantly hold a Buy rating on the stock. Moreover, the Quant Rating system categorizes Americold Realty Trust as a Strong Sell.