Altarea SCA (EPA:ALTA) reduces its price target by 9.36% to 123.42

The average one-year price target for Altarea SCA (EPA:ALTA) has been revised down to 123.42 per share. This represents a decrease of 9.36% from the previous estimate of 136.17 dated July 5, 2023.

This price target is an average of several projections provided by analysts. The latest targets range from a minimum of 104.03 to a maximum of 145.95 per share. Despite the reduction, the average price target still represents a potential increase of 45.20% from the last reported closing price of 85.00 per share.

What a disaster! While analysts are cutting their expectations, Altarea continues to maintain a dividend yield of 11.76%. But be careful, its dividend payout ratio is 1.84, which means the company is paying out more in dividends than it actually earns. They are drawing money from their reserves to keep shareholders happy, a situation that is clearly unsustainable in the long term.

Healthy companies with good growth prospects tend to retain part of their earnings to invest in their future, which translates into a payout ratio between 0 and 0.5. Altarea's 3-year dividend growth rate is just 0.11%, a rather mediocre figure.

Regarding institutional sentiment, there are 36 funds or institutions reporting positions in Altarea SCA, unchanged from the previous quarter. The average weight of the portfolio of all funds dedicated to ALTA is 0.09%, a decrease of 8.00%. The total shares held by institutions decreased by 1.28% over the last three months to 395,000 shares.

Among the main institutional shareholders is Fidelity International Small Cap Fund with 127,000 shares (0.63% ownership ), Vanguard Total International Stock Index Fund with 47,000 shares (0.23% ), and DFA International Real Estate Securities Portfolio with 45,000 shares (0.22% ), the latter reducing its position by 3.04%.

I wonder if these funds are seeing something that we are not seeing, because most are reducing their exposure to this company. With an apparently unsustainable dividend and a significant cut in the price target, perhaps we should look at this stock with quite a bit of skepticism.