Taubman Centers Inc. (NYSE: TCO) may be down with the broader market on Monday, but the analyst research team at Oppenheimer decided to raise its rating. Steve Manaker upgraded Taubman Centers to Outperform from Perform, and assigned an $85.00 price target.

What stood out about the upgrade here was that Taubman Centers was said to be trading 18% below the projected net asset value. That is one of the widest discounts among its peers.

Other issues boiled down to replacing cash flows, after $1.4 billion of assets which generated $80 million in net operating income plus an another $147 million expected by 2018 or so.

Oppenheimer decided to raise its 2015 and 2016 estimates based upon a higher net operating income assumption, and the firm also assumes that Taubman raises the dividend share by 10% in the first quarter 2016 and that the group buys back an additional 1 million shares in the third quarter of 2015.

In 2015, Taubman has had an aggressive development pipeline. Two projects opened recently and its share of the costs was $790 million. The nine remaining projects are broken down as four developments and five redevelopments, and these have an expected cost to Taubman of $1.3 billion and should open mostly in 2016.

Steve Manaker said:

We believe the stock offers an attractive combination of growth and value while some key risks have decreased. Management sold lower quality assets in the fourth quarter of 2014 and is replacing the lost NOI from developments. Developments are risky, and investors were concerned about development returns (revised lower in the first half of 2015) and execution (Taubman never developed in China, Korea, Puerto Rico or Hawaii). Given that some projects have opened and others are well along, we believe the chance of additional bad news from developments has decreased. The current stock price is 18% below our net asset value and implies zero value for developments and an additional $757 million of value destruction. We view this as a more than ample margin of safety.

Taubman Centers shares were down 2.8% at $69.60 shortly before the closing bell. That is after hitting a 52-week low of $68.35, and is down from a 52-week high of $85.26. Oppenheimer’s $85.00 price target compares to the consensus analyst estimate of $80.23 and compares to a street-high target of $93.00. Taubman’s dividend yield is 3.2% now.

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