Compass Point Downgrades Tanger to Neutral After Strong Run
Compass Point analyst Floris Van Dijkum has downgraded Tanger Inc. (NYSE:SKT) from Buy to Neutral, setting a price target of $38. The downgrade comes on the heels of strong Q4 2025 earnings results and as the stock recently reached a new 52-week high, suggesting the analyst believes much of the good news is now reflected in the share price.
Why the Rating Changed
The downgrade appears to be driven by valuation rather than any deterioration in Tanger’s business fundamentals. In fact, the company’s recent operational performance has been notably strong:
- Earnings beat: Tanger reported Q4 2025 earnings per share of $0.63, beating the analyst consensus estimate of $0.59 by $0.04. Net income rose to $0.29 per share, up from $0.23 per share in the prior year period.
- Record leasing activity: The company achieved leasing volume exceeding 3 million square feet during the year, its highest annual production on record. Management noted this has been a significant driver of traffic growth and increased customer visit frequency at its centers.
- Strong same-center NOI growth: Same-center net operating income increased 5.6% to $107.3 million for the fourth quarter, reflecting robust tenant demand at the company’s open-air outlet centers.
- Stock near 52-week high: SKT shares recently traded as high as $37.13, hitting a new 52-week high. With the stock trading near Compass Point’s $38 price target, the upside from current levels is limited — suggesting the downgrade is a classic case of the stock approaching fair value after a sustained rally.
- Positive 2026 guidance: Tanger also provided positive forward guidance for 2026, indicating management’s confidence in continued operational momentum.
In short, Compass Point is not signaling concern about Tanger’s business trajectory. The company delivered strong results across virtually every key metric. However, with the stock already trading near the $38 target, the risk-reward profile has shifted from favorable to balanced, warranting the move from Buy to Neutral.
Tanger’s Dividend Profile
Tanger currently pays an annual dividend of $1.17 per share, which translates to a dividend yield of approximately 3.11% at recent prices. The most recent ex-dividend date was January 29, 2026. As a REIT, Tanger is required to distribute a significant portion of its taxable income to shareholders, making the dividend a core component of the investment thesis.
With the company reporting a net margin of 19.70% and same-center NOI growing at a healthy clip, the dividend appears well-supported by current operations. Investors focused on income generation should note that the yield has compressed as the stock has appreciated — another factor that may have contributed to Compass Point’s decision to step back from its Buy rating.
What This Means for Investors
Compass Point’s downgrade reflects a common scenario in equity research: a company executes well, the stock rises to reflect that performance, and the rating adjusts accordingly. Tanger’s fundamentals remain solid, with record leasing volumes, growing NOI, and an earnings beat in Q4 2025. However, at current prices near the $38 target, the analyst sees limited near-term upside. Dividend investors may still find the 3.11% yield attractive, but the stock no longer carries the same margin of safety it may have offered at lower price levels.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.