A
fter the latest dip, many investors wonder what to do with Alexandria Real Estate Equities (ARE). The stock fell 11.8 % last week, 12 % in the past month, and is now more than 44 % below its five‑year peak. The decline reflects broader real‑estate nervousness and higher rates that lower the perceived value of lab, tech, and life‑science properties. Yet the fundamentals remain solid, and the company’s valuation metrics suggest it may be undervalued.

    A widely used score rates ARE 5 out of 6, indicating undervaluation across most analyst metrics. To understand why, we examine two common valuation approaches.

    **Discounted Cash Flow (DCF)**

    The DCF model projects future free cash flows and discounts them to present value. ARE’s most recent free cash flow is $1.63 billion. Analysts forecast growth to $1.22 billion by 2028, with gradual increases thereafter. Discounting these cash flows yields a fair value of about $109.68 per share. The current market price is roughly 32.6 % below that intrinsic value, signalling a significant discount.

    **Price‑to‑Sales (P/S)**

    The P/S ratio is useful for REITs with volatile earnings. ARE trades at 4.13× revenue, below the health‑care REIT average of 6.38× and the peer average of 5.79×. A “fair ratio” that adjusts for ARE’s growth prospects, risk profile and sector dynamics is 5.60×. The market price is therefore below what would be expected for a company with ARE’s profile, again indicating undervaluation.

    **Narratives**

    Beyond static numbers, investors can build a narrative: a story‑driven view that links industry trends, new deals and financial forecasts to a personalized fair‑value estimate. Narratives automatically compare your estimate to the current price and update as new data arrives. For example, an optimistic narrative might set a fair value near $144, while a cautious one might target $71. These tools help investors act confidently on their convictions.

    **Bottom line**

    ARE’s share price has slid sharply, but valuation metrics and a high value‑score suggest the stock may still be undervalued. Whether you see a buying opportunity or a cautionary tale depends on your narrative and risk tolerance.

    *Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. We do not hold positions in any securities mentioned.*