Positive Macro Environment, Valuation Render UDR Attractive, Stifel Says In Upgrade

UDR, Inc. UDR has earned a bullish review from Stifel, with the sell-side firm viewing the REIT as geographically well-diversified with a large portfolio, modest development platform and capital investment strategy. 

The Analyst

Analyst John Guinee upgraded shares of UDR from Hold to Buy and increased the price target from $38 to $40.

The Thesis

The macro picture for the REIT is changing to the positive, Guinee said in a Thursday note.

The uncertainty in Italy and Southern Europe is projected to lead to a lower interest rate environment and a risk-off investment mindset, the analyst said. 

Interest in "hard real estate" has been on the rise as global capital makes its way to calmer investment options amid the slowdown in global growth and the uncertainty engendered by headline news, Guinee said. 

Potential exists for "bear-hug" M&A offers that force the UDR board to consider the proposals, the analyst said. 

UDR's low leverage, solid operating numbers and value-added Developer Capital Program are positives, Guinee said. That said, Guinee said he remains concerned about a lack of near-term development deliveries and a supply-driven slowdown in operational metrics.

The Price Action

UDR stock has shed over 5 percent year-to-date.

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