Chicago, Illinois-based Equity Residential (EQR) engages in the acquisition, development, and management of rental apartment properties. With a market cap of $27.9 billion, the company is one of the leading, fully integrated, publicly traded multi-family REITs in the United States.
The real estate major has outpaced the broader over the past year but slightly underperformed in 2024. EQR gained 20.3% in 2024 and 31.6% over the past year, compared to the S&P 500 Index’s ($SPX) 23.1% gains on a YTD basis and 30.4% returns over the past 52-week period.
Zooming in further, EQR has also outpaced the iShares Global REIT ETF’s (REET) 5.2% gains in 2024 and 16.2% returns over the past year.
Despite reporting higher-than-expect revenues shares of Equity Residential plunged 4.8% after the release of its Q3 earnings on Oct. 30. The 3.4% year-over-year growth in rental revenues and a 2.1% rise in normalized FFO per share to $0.98 were overshadowed by a troubling 16.7% drop in net income, which fell to $143.1 million and missed analyst expectations. The company's same-store expenses grew at a faster rate of 3.2% than same-store revenues of 2.7%, contributing to tighter margins. Additionally, the surge in overall operating and other expenses surge exacerbated concerns about the company's ability to sustain profitability, unsettling investor confidence.
For the current fiscal year, ending in December, analysts expect EQR to report a 2.7% year-over-year growth in normalized FFO to $3.88. Moreover, the company has a robust bottom-line surprise history. It has surpassed or matched analysts’ FFO estimates in the past four quarters.
EQR has a consensus “Moderate Buy” rating overall. Out of the 26 analysts covering the stock, 10 recommend “Strong Buy,” one advises “Moderate Buy,” and 15 suggest a “Hold” rating.
This configuration is more bullish than three months ago, with eight “Strong Buy” ratings on the stock.
On Nov. 1, RBC Capital analyst Brad Heffern maintained an “Outperform” rating on EQR while lowering the price target to $79.
EQR’s mean price target of $78.17 represents a premium of just 6.2% to current price levels. Meanwhile, the Street-high price target of $90 suggests a potential upside of 22.3%.
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