UPDATE: ISI Group Upgrades American Campus Communities to Buy Ahead of Updated Leasing Statistics

In a report published Monday, ISI Group analyst Steve Sakwa upgraded the rating on American Campus Communities ACC from Neutral to Buy, but lowered the price target from $48.00 to $47.00.

In the report, ISI Group noted, “We are upgrading American Campus Communities (ACC) to Buy from Neutral but lowering our price target by $1 to $47. Shares of ACC are down over 10% YTD, underperforming the apartment sector by nearly 1100bp and the RMZ Index by almost 1900bp. Much of the market's angst has been driven by slower leasing progress across ACC's portfolio for the upcoming 2013-2014 school year. While our current forecast does not assume ACC is able to fully close the leasing gap versus last year, we believe the stock is oversold at current levels. ACC will provide updated leasing statistics Monday (6/3) after the close, and we believe the market has already priced in a poor leasing result, leaving little downside risk in our view. The stock currently trades at a 5.7% implied cap rate, which is 10bp above the overall REIT average vs. the -30bp historical spread. Even at our revised $47 price target, we still see a total return of nearly 18% from Friday's close as the current valuation has created an attractive entry point for investors looking to gain exposure to a best-in-class management team with an investment grade balance sheet and compelling development pipeline which is able to generate double-digit FFO growth.”

American Campus Communities closed on Friday at $40.83.