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Residential Equity (New York Stock Exchange:EQR) stock fell 1.2% in late Monday morning trading after Mizuho downgraded the apartment REIT to Neutral from Buy, as analyst Handel St. Juste believes it is “fairly valued with below-average earnings growth of its peers”.
Your Neutral rate aligns with the SA Quant Hold system rating and diverges from sell-side average analyst Buy rating.
The bearish covering also comes as Juste expects apartment REITs to continue to lag the broader REIT sector in the first half of 2024. The subsector lacks potential catalysts until the second half of next year, he added.
Amid weaker demand and pricing trends, as well as increased supply and higher interest rates, earnings expectations for apartment REITs are “too high,” he wrote in a note.
Meanwhile, the SA Stock Screener shows that AvalonBay Communities (AVB) has the highest Quant Rating among US apartment REITs, followed by BRT Apartments (BRT) and Apartment Income REIT Corp. (AIRC).
