Lineage gets mostly Buy ratings as analysts start coverage after IPO (NASDAQ:LINE)

With Lineage’s (NASDAQ:LINE) initial public offering a month and a half in the rear-view mirror, Wall Street analysts are picking up coverage of the cold-storage REIT, with mostly favorable ratings. Truist Securities, J.P. Morgan, Bank of America, and KeyBanc issued the equivalent of Buy ratings, while Mizuho Securities USA started with a Neutral rating.

Lineage (LINE) stock climbed 2.7% in Monday midday trading.

Issuing a Buy rating on Lineage (LINE) with a $94 price target, Truist analyst Ki Bin Kim noted, “Lineage has already established itself as a leader in this sector, and we anticipate the company’s competitive moat and market position to further solidify over time.”

Specifically, the REIT has an attractive internal growth potential and Kim expects it to achieve mid- to high-single-digit growth as the food sector recovers from a recent lower inventory cycle. The analyst also pointed to its potential for external growth by acquiring competitors in a fragmented industry.

Lineage (LINE) bills itself as the world’s largest global temperature-controlled warehouse REIT with more than 480 facilities totaling more than 84.1M square feet and 3.0B cubic feet of capacity.

BofA analyst Joshua Dennerlein, with a Buy rating and $100 price target, said, “We think the biggest advantage that LINE has versus competitors, including Americold Realty (COLD), is its best-in-class operating platform. LINE leverages technology to optimize task allocation and prioritize warehouse needs.”

KeyBanc Capital Markets’ Todd Thomas put an Overweight rating with a $92 price target on the stock. With the REIT’s upsized IPO and full over-allotment, Lineage (LINE) has lowered its leverage “out of the gate” and still has significant dry powder for capital deployment, he said.

Other potential catalysts include an investment-grade rating, providing access to the public bond market and a re-acceleration of accretive capital deployment. “Moreover, index inclusions could support ongoing index/passive investor demand over the next one to two years all while the operating environment stabilizes,” Thomas said.

J.P. Morgan’s Michael W. Mueller assigned an Overweight rating with $93 price target. “The company has proven to be quite acquisitive since 2019, and this seems like the most likely area of potential upside versus what is embedded in the model,” the analyst wrote in a note to clients. “LINE comes out of the starting gates with a strong equity valuation that it could use to drive acquisition activity.”

The cold-storage business, though, “is a bit of a grind today, with LINE expected to generate flattish 2024 SSNOI [same-store net operating income] growth due to throughput volume (“TPV”) and occupancy headwinds,” Mueller wrote. “A normalization of trends should lead to considerably stronger 2025/2026 results, however, and management remains focused on continuing its significant tech investment spend that it sees as a longer-term driver of its bottom-line growth.”

Mizuho Securities analyst Haendel St. Juste, who initiated at Neutral with a $86 price target, doesn’t dispute Lineage’s (LINE) advantages, but believes that many of its positives are largely priced into the stock. Three key debates on the stock are: its path to improving core operating metrics; the timing and scale of external growth; and how technology benefits the Lineage (LINE), he said.