JPMorgan analyst Anthony Paolone upgraded EPR Properties to Neutral from Underweight with a $52 price target. The analyst is "more constructive" on real estate investment trusts going into next year. Real estate stocks underperformed in 2022, earnings trended better over the course of the year, and the result has been a "notable re-rating lower" in valuation on both an absolute basis and relative to the broader equity market, Paolone tells investors in a research note. He thinks there is still some downside risk to 2023 estimates, but says REIT estimates "should hold up better than many other sectors in a recession." Paolone starts 2023 most favorable on strip centers, net lease, and industrial, and is bullish on commercial real estate brokers "recognizing near-term earnings risk." He says that while valuations are attractive in residential, he moves to the sidelines as slowing growth and downside risk from the economy make the setup tougher. In conjunction with its 2022 outlook, JPMorgan made 12 rating changes.
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