Chicago, Illinois-based Equity Residential (EQR) is a real estate company that acquires, develops and manages residential rental properties. Valued at a market cap of $26.9 billion, the company primarily owns and operates high-quality apartment communities located in urban and high-density suburban areas across key U.S. markets such as Boston, New York, Washington D.C., Southern California, San Francisco, Seattle, and Denver.
Shares of this residential REIT have lagged behind the broader market over the past 52 weeks. EQR has gained 4.9% over this time frame, while the broader S&P 500 Index ($SPX) has surged 11.5%. Moreover, on a YTD basis, the stock is down 1.3%, compared to SPX’s marginal rise.
Narrowing the focus, EQR has also underperformed the Residential REIT ETF’s (HAUS) 5.7% return over the past 52 weeks. However, it has outpaced the ETF’s 1.8% downtick on a YTD basis.
On Apr. 29, EQR delivered its mixed Q1 earnings results, and shares of the company soared nearly 1.1% in the following trading session. While its revenue of $760.8 came in slightly below consensus estimates, it marked a 4.1% year-over-year increase, driven by strong performance in New York and Washington, D.C., along with ongoing recovery in San Francisco and Seattle. Moreover, its same-store revenue advanced 2.2% year-over-year, while its same-store NOI grew by 1.3%. Adding to the positives, its normalized FFO of $0.95 per share climbed 2.2% from the previous-year quarter and exceeded Wall Street estimates by the same margin.
For the current fiscal year, ending in December, analysts expect EQR’s FFO to grow 2.1% year over year to $3.97 per share. The company’s FFO surprise history is promising. It topped or met the consensus estimates in each of the last four quarters.
Among the 26 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on 10 “Strong Buy,” one “Moderate Buy,” and 15 “Hold” ratings.
This configuration is slightly less bullish than three months ago, with 11 analysts suggesting a “Strong Buy” rating.
On May 12, The Bank of Nova Scotia (BNS) analyst Nicholas Yulico maintained a “Sector Perform” rating on EQR and raised its price target to $82, which indicates a 15.7% potential upside from the current levels.
The mean price target of $77.43 represents a 9.3% premium from EQR’s current price levels, while the Street-high price target of $87 suggests an upside potential of 22.8%.
