Eight analysts have increased their EPS estimates for this real estate company in the past 30 days; the company beat Wall Street’s earnings estimates by $0.37 in its most recent quarter.
Jones Lang LaSalle Incorporated (JLL)
From Barclays Capital Equity Research
We recently hosted Jones Lang LaSalle Incorporated’s (JLL) Christie Kelly (CFO) and Grace Chang (MD, Corporate Finance and IR) for investor meetings in Boston. Much of what we learned in these meetings largely reinforced our existing view—namely that JLL should continue to benefit from its global scale, an ever-expanding suite of services and a growing proportion of recurring/non-transactional revenue.
Further, we continue to believe there is ample revenue opportunity with existing JLL clients, as well as corporations not currently utilizing outsourced real estate services. As real estate and related services become increasingly complex, corporations are looking to outsource the management/operations of their real estate and will seek out vendors with the ability to deliver across geographies and business lines. JLL has already reaped the benefits from this long-term secular outsourcing trend, having grown fee revenue at a +10% annual CAGR from 2008 through 2017.
Looking forward, solid underlying fundamentals for occupier outsourcing should persist—and notably should be more durable than transactional services in an economic downturn, should one arise. New reporting standards create some near-term noise, but overall should be directionally positive for adjusted EPS.
Notwithstanding the +17.3% return YTD and +62.3% TTM (vs. -1.2% and +11.8% for the S&P 500, respectively), JLL shares still trade at an attractive valuation (16.1x our new FY18 adj. EPS). Consequently, we reiterate our Overweight rating.
We’re also updating our estimates for 1Q18 results and new reporting standards. We’re increasing our FY18 adj. EPS from $9.87 to $10.52, +$0.52 above cons. We’re raising our PT from $179 to $184, based on a $180.67 DCF (75%) and $195.20 regression value (25%).
Ross L. Smotrich, Barclays Capital Equity Research, www.barcap.com, 212-526-2306, May 15, 2018