## KEY TAKEAWAYS
- Citi Research downgraded Pershing Square (NYSE: PS) to Sell/High Risk from Neutral/High Risk, citing a near-term valuation that analyst Matthew Heimermann says cannot be rationalized.
- Citi set a $45.00 price target, well below the roughly $53.20 level at which shares traded in Friday pre-market trading, down 2.10% on the day.
- Citi said the stock has traded through its target price and that EPS estimates have moved sideways since the company's IPO, reflecting modest portfolio returns.
- Citi's rating diverges from the Wall Street and Seeking Alpha author consensus of Hold.
- Citi acknowledged the perpetual nature of the company's asset base could justify a higher-than-typical multiple, but said financial performance may need time to catch up to the share price.
## DETAILED SUMMARY
Citi Research has downgraded Bill Ackman's Pershing Square (NYSE: PS) to Sell/High Risk from Neutral/High Risk, according to a research note published by Seeking Alpha and syndicated by Investing.com UK. Citi analyst Matthew Heimermann argued that the stock's short-term valuation cannot be rationalized. Shares were 2.10% lower at $53.20 in pre-market trading on Friday.
In the note, Heimermann said the stock has traded through Citi's target price. He added that EPS estimates have trended sideways since the company's IPO, reflecting modest portfolio returns. Citi set a price target of $45.00.
Heimermann also acknowledged that the perpetual nature of the company's asset base should command a higher-than-typical multiple, which he described as greater duration value. He nonetheless said financial performance may take time to catch up to the current share price. He noted that this could change if asymmetric investments, such as the Howard Hughes (HHH) or GSE holdings, generate upside, or if the fund benefits from stronger momentum in its traditional holdings.
Citi's rating differs from the average Wall Street and Seeking Alpha author rating of Hold. Other coverage of the downgrade reported that the shares fell about 2.1% in premarket trading and that the stock had rallied despite weak fund performance, leaving the management company with a lofty valuation. Coverage also noted that the fund's weak performance could complicate Ackman's goal of a high valuation for the management company's potential 2026 public offering.
