Recent momentum and leasing progress put Macerich in focus

Macerich (MAC) is back on investor radar after a period of strong technical momentum, with the stock up nearly 50% over the past year and on track to reach 85% of its leasing target by midyear.

The recent leasing progress and mixed analyst sentiment appear to sit alongside strong price momentum, with Macerich’s 90 day share price return of 21.49% and 1 year total shareholder return of 59.49% pointing to building interest from investors.

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The share price and leasing progress place Macerich in a very different position compared with a year ago. Does the current valuation still provide enough potential upside to justify the risks buyers would be taking from this point?

Most Popular Narrative: 3% Overvalued

The most followed narrative currently puts Macerich’s fair value at $25.75, slightly below the last close of $26.51. This frames the recent rally as slightly ahead of those assumptions.

Accelerated leasing activity, including a record pace of new deal signings and strong LOI pipeline, is driving higher leasing spreads and sustained tenant demand. This supports significant NOI and revenue growth as new tenants open and backfilled spaces (especially former Forever 21) achieve higher rental rates.

It is useful to see what kind of revenue path and margin rebuild sits behind that fair value line. The narrative leans on a detailed earnings ramp and a punchy future profit multiple that is more typical of faster growing sectors. It is important to understand what has to go right on leasing, profitability and share count for those numbers to hold up.

Result: Fair Value of $25.75 (OVERVALUED)

However, Macerich still faces high leverage and concentrated exposure to challenged mall markets, so setbacks on asset sales or tenant health could quickly test this fair value story.

Another View: SWS DCF model points to upside

The narrative-led fair value of $25.75 suggests Macerich is slightly ahead of itself, yet our DCF model paints a different picture. With a future cash flow value estimate of $41.30, Macerich screens as trading at a sizable discount. Which version of fair value do you trust more?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Macerich for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment clearly split on Macerich, it makes sense to move quickly, review the full data set, and weigh both sides of the story. To help with that balance, look at the 2 key rewards and 3 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.