Equity Residential (EQR), headquartered in Chicago, Illinois, specializes in the acquisition, development, and management of residential properties. Valued at $27.4 billion by market cap, the company owns or has investments in 299 properties consisting of 79,688 apartment units. Its extensive portfolio spans major markets, including Boston, New York, Washington, D.C., Seattle, San Francisco, and Southern California.
Shares of this leading residential REIT have slightly underperformed the broader market over the past year. EQR stock has gained 14.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27%. However, things are looking up for the stock in 2024. EQR stock is up 18.7%, surpassing SPX’s 16.8% rise on a YTD basis.
Narrowing the focus, EQR stock has also lagged behind the Residential REIT ETF (HAUS). The exchange-traded fund has returned about 26.1% over the past year. However, EQR’s gains on a YTD basis outshine the ETF’s 16.5% returns over the same time frame.
On Aug. 7, Equity Residential announced its agreement to acquire 11 apartment properties from Blackstone Inc. (BX) for approximately $964 million. Equity Residential aims to leverage its operating platform to unlock additional value from these acquisitions, reaffirming its earnings guidance provided in the Q2 2024 earnings release. Since the announcement, the stock has predominantly traded in positive territory.
Moreover, EQR stock rose marginally on Jul. 29 after the company announced its Q2 earnings report that exceeded Wall Street expectations. It posted a normalized FFO of $380.1 million, or 97 cents per share, beating the forecast of 96 cents. Equity Residential’s revenue of $734.2 million surpassed the $734.1 million estimate. For the full year, it forecasts normalized FFO between $3.86 and $3.92 per share, up from the prior range of $3.80 to $3.90.
For the current fiscal year, ending in December, analysts expect Equity Residential’s EPS to improve 2.7% to $3.88 on a diluted basis. The company’s earnings surprise history is mixed. It beat or matched the consensus estimate in three of the last four quarters while missing on one occasion.
Among the 24 analysts covering EQR stock, the consensus is a “Moderate Buy.” That’s based on nine “Strong Buy” ratings, one “Moderate Buy,” and 14 “Holds.”
This configuration is more bullish than two months ago, with eight analysts suggesting a “Strong Buy.”
On Aug. 7, Scotiabank analyst Nicholas Yulico raised the price target on Equity Residential to $73 from $72 while maintaining a “Sector Perform” rating on the shares.
While EQR currently trades above its mean price target of $71.81, the Street-high price target of $85 suggests an upside potential of 17.1%.
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On the date of publication, Kritika Sarmah 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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