Key Stats for Realty Income Stock
- Current Price: $55.54
- Target Price (Mid): ~$80
- Street Target: ~$67
- Potential Total Return: ~43%
- Annualized IRR: ~9% / year
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What Happened?
Scotiabank downgraded Realty Income Corporation (O) to Sector Perform from Sector Outperform in a note reported September 24, 2026, cutting its target to $59 from $67. The bank cited rate pressure on funds from operations (FFO) growth, limited earnings benefit from new capital sources, and above-peer rate sensitivity. It said those outweigh Realty Income’s cash flow security and external growth opportunities.
Shares closed at $55.54 on September 25, about 6% below that target, in the week the 10-year Treasury yield hit its highest level since June 2007. Management had lifted 2026 guidance for adjusted funds from operations (AFFO), a REIT cash-flow figure that strips out non-cash items like depreciation, to $4.44 to $4.45 per share in its August 5 investor relations materials.
The AFFO Beat Disappeared in Q2
Realty Income’s beat-and-miss record supports part of Scotiabank’s concern. Adjusted FFO per share came in at $1.13 against a $1.09 consensus in the first quarter of 2026, then only matched the $1.09 estimate in the second. FFO per share, the measure AFFO is built from, missed consensus four quarters in a row, from the September 2025 quarter through the June 2026 quarter.
Analysts expect 2027 AFFO of around $4.57 per share, about 3% above the $4.44 expected for 2026 and slower than the roughly 4% growth management guided for this year. Evercore ISI and Mizuho trimmed their targets in September. The Street’s mean target is around $67 across 20 estimates, with ratings at 6 Buys, 1 Outperform, 16 Holds, and 1 Underperform.
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New Shares Now Cost About 8%, Up From About 7% in June
At a Bank of America conference on September 15, CFO and Treasurer Jonathan Pong said Realty Income weighs capital in two ways. Long term, each deal “has to meet or exceed what is effectively a long-term unlevered weighted average cost of capital that’s in the 8% area.” Near term, the cost of new public equity “is really a function of our stock price. And so it’s basically our AFFO yield.”
The near-term lens has moved against the company. At $55.54 and NTM AFFO of around $4.48 per share, that yield is about 8%, up from about 7% on June 30, when the stock traded near 14 times NTM AFFO. The shares also sit at about 0.9x the Street’s average net asset value estimate of around $61, so new stock would sell below what analysts think the real estate is worth.
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The CFO Named Deal Volume as the Pressure Point
Pong called the Apollo Global Management (APO) retail venture “a fairly low cost of long-term equity as well at 6.875%.” Asked which effect of higher-for-longer rates would hit the sector’s earnings hardest, he answered, “Lower transaction activity.” In a separate answer, he said “we have never felt like we should be buying for the sake of buying and posting numbers.”
That discipline sits beside a $10 billion 2026 investment volume target. Fewer deals would protect returns but slow the AFFO growth, Scotiabank questions. Credit was not the pressure point as of September 15: Investor Relations’ Alex Waters said the watch list had stepped down slightly to 5.8% to 5.9% of annual base rent.
TIKR Advanced Model Analysis
- Current Price: $55.54
- Target Price (Mid): ~$80
- Potential Total Return: ~43%
- Annualized IRR: ~9% / year
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The TIKR model’s mid case, the only case its summary card shows for this horizon, projects about $80 per share by December 31, 2030. That is around 43% above $55.54, or about 9% a year.
The main risk shows in the card’s own history. The P/E ratio contracted 5.1% a year over five years and 18.8% over the past year, and continued de-rating would work against any mid-case path. The upside is partner capital and fee income lifting AFFO growth above the roughly 3% analysts expect for 2027. The output is a scenario.
Conclusion
The third-quarter report is the test. Last year’s arrived on November 3, 2025, per TIKR data. A fifth straight FFO per share miss would support Scotiabank’s call, while adjusted FFO per share landing above consensus would suggest partner capital is starting to reach per-share earnings.
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Should You Invest in Realty Income?
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Pull up Realty Income, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
