Analyst Upgrades Camden Property Trust: Anticipating A 'Mean-Revert' And Strong FFO Growth

Start generating passive income through real estate.

Own a piece of your favorite cities through diversified real estate investments in the country's top markets

*Terms and conditions apply. Visit Nada's website for more details.

BMO Capital Markets analyst John P. Kim upgraded Camden Property Trust CPT to Outperform from Market Perform at an increased price target of $126 (from $125).

The analyst believes CPT shares have underperformed peers (+0.8% vs. +12.6%) and expects it to 'mean-revert' in the near term. 

The analyst is bullish on CPT's strong balance sheet (4.3x Net Debt / EBITDA) and expects it to witness slightly better FFO per share growth (+3.7% vs +3.4% for the Apartment REIT sector) in 2024.

Kim projects CPT to outperform in the near term and anticipates a guidance raise from a stronger employment background and lower-than-expected supply-related pressures.

The analyst notes consensus expectation of 2023 Core FFO per share of $6.88 and same-store revenue growth of 5.7%, partly aided by lower-than-expected pressure on rents from the incoming supply.

Kim is pleased with CPT's high exposure to class A assets at 37.5% (as per CoStar) among Sunbelt peers, driving above-average leasing spreads on increased demand.

Also, the analyst sees supply across the top 12 Sunbelt markets increasing by +4.5% in FY23 and stabilizing vacancy rates to reach a +270bps delta to Coastal markets.

Kim raised estimates for revenue and FFO per share to $1.537 billion (from $1.534 billion) and $6.88 (from $6.85) for 2023, and $1.586 billion (from $1.583 billion) and $7.14 (from $7.10), respectively, for 2024.

Also ReadU.S. Apartment Values' Will Plunge A Further 20%,' Economists Say, But Wall Street Still Sees Major Upside In These REITs — Be Greedy When Others Are Fearful?

Price Action: CPT shares are trading lower by 0.53% at $110.16 on the last check Tuesday.

Market News and Data brought to you by Benzinga APIs
Price Target
Posted In: Analyst ColorEquitiesLarge CapNewsREITUpgradesPrice TargetMarketsAnalyst RatingsTrading IdeasReal EstateBriefsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!