Valued at a market cap of $25.1 billion, AvalonBay Communities, Inc. (AVB) is a residential real estate investment trust (REIT) that develops, acquires, and manages high-quality apartment communities. The Arlington, Virginia-based company is known for its well-located, amenity-rich multifamily properties that cater to higher-income renters.
This residential REIT has significantly trailed behind the broader market over the past 52 weeks. Shares of AVB have declined 22.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 12.1%. Moreover, on a YTD basis, the stock is down 19.6%, compared to SPX’s 12.8% return.
Narrowing the focus, AVB has also considerably underperformed the iShares Residential and Multisector Real Estate ETF’s (REZ) 3.5% downtick over the past 52 weeks and 3.9% YTD rise.
On Oct. 29, shares of AVB plunged 4.3% after its weaker-than-expected Q3 earnings release. The company’s core FFO per share of $2.75 increased marginally from the year-ago quarter, but missed consensus estimates by 2.1%, making investors jittery. Meanwhile, its same-store residential revenue increased modestly by 2.3% annually to $685.4 million, and its same-store residential Net Operating Income (NOI) grew 1.1%, reaching $461 million.
For the current fiscal year, ending in December, analysts expect AVB’s FFO per share to grow 2.2% year over year to $11.25. The company’s FFO surprise history is mixed. It topped the consensus estimates in two of the last four quarters, while missing on two other occasions.
Among the 25 analysts covering the stock, the consensus rating is a "Moderate Buy,” which is based on seven “Strong Buy,” two “Moderate Buy,” and 16 "Hold” ratings.
This configuration is slightly less bullish than two months ago, with eight analysts suggesting a “Strong Buy” rating.
On Nov. 13, Evercore Inc. (EVR) analyst Steve Sakwa maintained a "Hold" rating on AVB and set a price target of $204, indicating a 15.3% potential upside from the current levels.
The mean price target of $206.99 represents a 17% premium from AVB’s current price levels, while the Street-high price target of $235 suggests a 32.8% potential upside from the current levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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