Equity Residential Marks Improving Trends In February; Street Says Hold

Equity Residential reported improving same-store operating trends in its Residential business in the month of Feb. Shares of the real estate investment trust closed 1.7% higher on Friday.

Equity Residential (EQR) said that physical occupancy at the end of Feb. 2021 stood at 95.3%, which improved 20 basis points from 95.1% in Jan. 2021 and 90 basis points from 94.4% in Dec. 2020. The company is also witnessing an improvement in the pricing trend, which has risen to about $2,413 in Feb. 2021, from $2,359 in Jan. and $2,287 in Dec.

While blended rates deteriorated to about 11.5% in Feb., the rates improved from Jan. and Dec. levels.

Equity Residential said, “The Company continued to see good demand for its apartment units in February 2021 as evidenced by a continued trend of Move Ins exceeding Move Outs translating into higher Physical Occupancy. Additionally, we are currently seeing ongoing improvement in our rates and reductions in Leasing Concession use.” (See Equity Residential stock analysis on TipRanks)

Last month, the company reported its fourth-quarter results, where revenues of $613.4 million topped the Street’s estimates of $610.8 million. Normalized FFO (funds from operations) of $0.76 per share came in ahead of consensus estimates of $0.74 but declined from $0.91 in the year-ago period.

Following the earnings, BMO Capital analyst John Kim maintained a Hold rating and a price target of $61 (11% downside potential) on the stock. In a note to investors, the analyst said, “This earnings season has shown that ’21 earnings take a backseat to operational trends for coastal apartment REITs, but EQR is putting this to the test with ’21 Core FFOps guidance suggesting a 17% y/y decline, 11% below consensus.”

Overall, the Street has a Hold consensus rating on the stock based on 5 Holds, 4 Buys and 2 Sells. The average analyst price target of $67 implies downside potential of around 3% to current levels. Shares have declined around 11% over the past year.

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