Buy Rating for Equity Residential on Strong Market Position and Attractive Valuation

In a report released today, John Kim from BMO Capital upgraded Equity Residential (EQR – Research Report) to a Buy, with a price target of $70.00.

John Kim has given his Buy rating due to a combination of factors, including Equity Residential’s attractive valuation and the strength of its markets. Kim notes that Equity Residential (EQR) is trading at a discount, with a consensus implied capitalization rate that is higher compared to a recent acquisition in the sector, despite facing moderate supply risks and benefiting from a strong employment market. This is further underscored by the positive jobs-to-supply ratio in EQR’s markets, which is significantly higher than the national average. Kim’s confidence is also reflected in his projection that EQR’s revenue growth will be at the higher end of the company’s own guidance for 2024.

Additionally, Kim believes that EQR’s solid rent growth and manageable new supply contribute to its potential to outperform. He suggests that EQR’s conservative guidance for 2024 is likely to be exceeded, given the resiliency of U.S. employment and the company’s performance in terms of lease growth rates, earnings, and bad debt improvements. With effective asking rents showing year-over-year increases that outpace the sector average, and multifamily REITs trading at generally discounted valuations, Kim sees an opportunity for EQR to benefit from these market dynamics. Thus, these insights have led to his recommendation that investors buy EQR shares.

In another report released on April 10, RBC Capital also maintained a Buy rating on the stock with a $68.00 price target.

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Equity Residential (EQR) Company Description:

Equity Residential operates as a real estate investment trust. It engages in the acquisition, development, and management of rental apartment properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The company was founded by Robert H. Lurie and Sam Zell in March 1993 and is headquartered in Chicago, IL.