Alexandria Real Estate Equities (ARE) faced limited visibility on its earnings trough amid an oversupply of life-science space and slowing demand from life-science tenants, Morgan Stanley said Friday in a report.

The firm initiated coverage of the stock with an equal-weight rating and a $55 price target.

Morgan Stanley expects a total return of about 9% with bullish and bearish prospects evenly balanced.

While the company's portfolio has outperformed the broader life science real estate market, sector headwinds have emerged with occupancy falling and same-store net operating income declining, the report said.

Management "reset expectations" at its 2025 investor day and expects same-store net operating income to fall 9% in 2026, the report said.

Funds from operations per share are forecast to decline 5% in 2025, 28% in 2026, and 9% in 2027, underperforming peers, Morgan Stanley said in its base case.

Upside prospects include better-than-expected execution on $2.9 billion in planned asset sales, increased funding for life science companies, and a stronger flight to quality in leasing, the report said.

Price: 53.34, Change: +0.07, Percent Change: +0.13