Right or wrong, investors rely on the opinions of Wall Street analysts a great deal when evaluating which stocks will appreciate the most. An analyst's projection of the future price of a security is called a price target and encompasses a 12- to 18-month outlook. The best analysts are only correct about 50% of the time because it's difficult to predict economic trends so far out into the future, and there are always unexpected positive or negative events in a company that can affect its stock performance.
Nevertheless, any time an analyst changes a rating or price target on a stock, it can also affect its price, at least in the short term.
On April 9, Truist analyst Michael Lewis maintained previous positions on nine residential real estate investment trusts (REITs) but reduced the price targets on eight of them. Take a look at some of the REITs that were given reduced targets.
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Mid-America Apartment Communities Inc. MAA is a self-administered residential REIT that specializes in purchasing and leasing apartment complexes. As of Dec. 31, it owned over 102,000 units in 300 communities in 16 states and Washington, D.C. Most of Mid-America Apartment Communities' properties are in the Southeast, Southwest and Mid-Atlantic states.
Mid-America Apartment Communities is a member of the S&P 500 and has been a public company for 30 years. Mid-America has paid 120 consecutive quarterly cash dividends since its initial public offering (IPO) in 1994. At the end of 2023, same-store occupancy was 95.5%.
On April 8, Mid-America announced it will release its first-quarter 2024 operating results after the market closes on May 1.
On April 9, Truist analyst Michael Lewis maintained Mid-America Apartment with a Buy rating but lowered the price target from $152 to $148.
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Essex Property Trust Inc. ESS is a residential REIT that owns and operates 252 apartment communities, with 62,000 units in the West Coast states of California and Washington. Essex Property Trust is a member of the S&P 500 and a Dividend Aristocrat.
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On March 25, Essex Property Trust acquired JV Partner's 49.9% interest in four apartment communities with 1,480 units for a total purchase price of $505 million.
On April 5, Essex Property Trust announced it would release first-quarter operating results after the market close on April 30.
On April 9, analyst Lewis maintained Essex Property Trust with a Hold rating but added a small price target reduction from $259 to $255. This was in sharp contrast to Bank of America Securities analyst Joshua Dennerlein, who on April 1 upgraded Essex Property Trust from Neutral to Buy and raised the price target by 10% from $250 to $275.
AvalonBay Communities Inc. AVB is a residential REIT that acquires, develops and manages multifamily communities. As of Dec. 31, AvalonBay Communities owned approximately 90,669 apartments directly or indirectly in 299 communities across 12 states and Washington, D.C.
On Jan. 31, AvalonBay posted its fourth-quarter operating results. Core funds from operations (FFO) of $2.74 were in line with estimates, but up from $2.59 in the fourth quarter of 2022. Revenue of $702.7 million beat the estimates of $700.16 million and was 5.45% above revenue of $666.39 million in the fourth quarter of 2022.
On April 9, analyst Lewis maintained AvalonBay Communities with a Hold rating but slightly lowered the price target from $201 to $197. Avalon will release its first-quarter 2024 earnings after the market closes on April 25.
The five other residential REITs that analyst Lewis lowered price targets on were:
| REIT NAME | SYMBOL | RATING | OLD PRICE TARGET | NEW PRICE TARGET | % DECLINE |
| Apartment Income REIT Corp. | AIRC | Buy | $40 | $37 | 7.5% |
| Equity Residential | EQR | Buy | $71 | $67 | 5.6% |
| NexPoint Residential Trust Inc. | NXRT | Hold | $37 | $35 | 5.4% |
| UDR Inc. | UDR | Buy | $45 | $42 | 6.6% |
| Veris Residential Inc. | VRE | Hold | $15 | $14 | 6.6% |
Camden Property Trust CPT was the lone residential REIT for which Lewis raised the price target. He maintained a Buy rating and raised the price target from $113 to $114.
Camden Property Trust is a Houston-based residential REIT that owns and manages 172 properties with 58,634 units in 15 major cities across the U.S. Some of its apartment complexes also contain ground-floor retail space, offices or mixed-use space. It's a member of the S&P 500 and had its IPO in 1993. At the end of the third quarter of 2023, its occupancy rate was 95%.
Lewis covers the real estate sector. He has 157 ratings with a 58.1% Smart Score and an overall average return of 2.75%.
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