Is There Now An Opportunity In Alexandria Real Estate Equities (ARE) After The 1 Year Slump

• If you are wondering whether Alexandria Real Estate Equities is priced attractively today or if the recent share price already reflects its appeal, this article is here to help you assess what you are really paying for.
• The stock last closed at US$53.65, with returns of 2.2% over 7 days, a 10.1% decline over 30 days, a 9.6% gain year to date, and a 40.2% decline over 1 year, as well as 58.8% and 58.7% declines over 3 and 5 years respectively.
• Recent share price moves have kept Alexandria Real Estate Equities in focus as investors reassess how they feel about listed real estate and interest rate risk. That context matters when you are judging whether today’s price is an opportunity or primarily a reaction to shifting sentiment.
• Based on our checks, Alexandria Real Estate Equities scores 5 out of 6 on valuation, as shown by its valuation score of 5. Next we will walk through the main valuation approaches investors often use, and we will also point you to a more complete way to think about value at the end of the article.

Find out why Alexandria Real Estate Equities's -40.2% return over the last year is lagging behind its peers.

Approach 1: Alexandria Real Estate Equities Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future adjusted funds from operations and discounting those cash flows back to today in dollar terms.

For Alexandria Real Estate Equities, the model uses a two stage Free Cash Flow to Equity approach based on adjusted funds from operations. The latest twelve month free cash flow is about $1.53b. Analyst estimates and extrapolations suggest free cash flow of $793.09m in 2026 and $1.20b in 2035, with intermediate years stepping up gradually according to the Simply Wall St projections.

When all these projected cash flows are discounted back and combined, the model arrives at an intrinsic value of about $86.90 per share. Compared with the recent share price of $53.65, the DCF output implies the stock trades at a 38.3% discount to this estimate, which points to Alexandria Real Estate Equities being undervalued on this measure.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Alexandria Real Estate Equities is undervalued by 38.3%. Track this in your watchlist or portfolio, or discover 54 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Alexandria Real Estate Equities.

Approach 2: Alexandria Real Estate Equities Price vs Sales

For a profitable company like Alexandria Real Estate Equities, the P/S ratio is a useful way to see what investors are currently paying for each dollar of revenue. It can be especially handy when earnings are not the cleanest guide, and you still want a simple, comparable yardstick.

Growth expectations and risk both influence what is considered a normal or fair trading multiple. Higher expected growth and lower perceived risk can justify a higher P/S ratio, while slower growth or higher risk usually call for a lower one.

Alexandria Real Estate Equities currently trades on a P/S of 3.08x. That is below the Health Care REITs industry average of 7.02x and below the peer group average of 6.05x. Simply Wall St’s Fair Ratio for the company is 3.98x, which is an estimate of what the P/S might be given its growth profile, industry, profit margins, market cap and risk characteristics.

The Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for company specific factors rather than assuming every REIT should have the same multiple. Since the current 3.08x P/S is below the 3.98x Fair Ratio, the stock screens as undervalued on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Alexandria Real Estate Equities Narrative

Earlier we mentioned that there is an even better way to understand valuation, and on Simply Wall St that comes through Narratives. You set out your story for Alexandria Real Estate Equities, link it to specific assumptions for future revenue, earnings and margins, and see how that flows through to a fair value that you can compare with the current price.

Each Narrative lives on the Community page and turns your view into numbers. For example, one investor might anchor on a higher fair value of about US$136.20 based on stronger growth and profitability assumptions, while another might work with a lower fair value of about US$50.00 that reflects more cautious expectations. Both can instantly see whether their fair value suggests the stock looks expensive or cheap relative to the market price.

Narratives are tied to live data on the platform, so new earnings, news or updated analyst views feed straight into your forecast and fair value. This means your Alexandria Real Estate Equities story is kept current without you rebuilding the whole model each time something changes.

For Alexandria Real Estate Equities however, we will make it really easy for you with previews of two leading Alexandria Real Estate Equities Narratives:

🐂 Alexandria Real Estate Equities Bull Case

Fair value: US$88.00 per share

Implied discount to fair value vs last close: 39.0%

Revenue growth assumption: 10.45% decline per year

• Uses book NAV of about US$98 per share as the main anchor, then applies a 20% margin of safety to arrive at a fair value of roughly US$78 to US$88, still well above the recent share price of US$53.65.
• Accepts that 2025 has brought impairments, lower occupancy around 90.6% in North America and a 45% dividend cut, but argues that even with conservative haircuts to property values, the current price embeds a large discount to intrinsic worth.
• Highlights life science concentration, higher leverage and refinancing risk as key issues, yet still sees the current market pricing as more pessimistic than what the balance sheet, FFO profile and asset base would justify.

🐻 Alexandria Real Estate Equities Bear Case

Fair value: US$50.00 per share

Implied premium to fair value vs last close: 7.3%

Revenue growth assumption: 2.61% decline per year

• Works off the more cautious end of analyst targets, with a fair value of US$50.00 that factors in revenue contraction, higher discount rates and a lower future P/E multiple, even though profit margin assumptions are relatively healthy.
• Flags large recent impairments, a sizeable dividend cut, rising financing costs, concentrated exposure to key biotech hubs and potential demand shifts from hybrid work as reasons the shares could trade below past valuation levels.
• Stresses that to side with this bear case you would need to assume weaker top line trends and a lower justified multiple, and encourages you to test those assumptions against your own expectations rather than lean solely on headline price targets.

If you want to see how these Alexandria Real Estate Equities stories look in full, you can start with the bull and bear previews above, then use the Community page to decide which set of assumptions feels closest to your own.

Do you think there's more to the story for Alexandria Real Estate Equities? Head over to our Community to see what others are saying!

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.

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