Analysts Gone Wild! 39 REIT Price Targets Raised In One Day

Eight magic words last week were all it took. When FED Chairman Jerome Powell said, "The time has come for policy to adjust," markets were off and running. With an expected rate cut in September, analysts are now tripping over themselves to raise price targets on real estate investment trusts (REITs).

It's not unusual to see six to eight price target increases on a Monday. But on August 26, in an extraordinary tour de force, 39 price target increases were assigned to REITs by a half dozen analysts from four Wall Street firms.

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Wall Street analysts' views carry great weight on Wall Street. So, investors can expect to see the share price rise if an analyst upgrades a stock or maintains a previous rating while increasing the price target. And it often happens that when one analyst raises a price target, other analysts will jump on the bandwagon. Take a look at what happened on this recent Monday morning.

It began with Wells Fargo analyst James Feldman, who upgraded and raised price targets on three residential REITs: 

American Homes 4 Rent Class A AMH was upgraded from Equal-Weight to Overweight and the price target was raised by 16.6% from $36 to $42. The analyst noted that rental demand for single-family homes should strengthen.

Camden Property Trust CPT was upgraded from Underweight to Equal-Weight and the price target was raised by 22.1% from $104 to $127.

Mid-America Apartment Communities Inc MAA was upgraded from Equal-Weight to Overweight, and the price target was raised by 26% from $138 to $174. Feldman also sees residential apartment REITs continuing to maintain good financials.

Several other analysts, including Piper Sandler's Alexander Goldfarb, Truist Securities analyst Michael Lewis and Scotiabank analyst Nicholas Yulico also raised price targets on Camden Property Trust and Mid-America Apartment Communities, with price targets ranging from $125 to $138 on Camden and $161 to $167 for Mid-America.

UDR Inc UDR is another residential REIT specializing in apartment communities. UDR had its price target lifted by four different analysts on Monday, which is somewhat unusual. Goldfarb maintained it at Neutral and raised the target from $40 to $46. Lewis maintained UDR at Buy and lifted the price target from $44 to $47. Yulico maintained UDR with a Sector Perform while raising the price target from $43 to $45, and Feldman maintained UDR at Overweight and raised the price target from $41 to $48. Both Mid-America and UDR have outstanding dividend growth histories.    

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Other REITs that saw multiple analysts lifting price targets were:

Essex Property Trust Inc ESS, three analysts, with prices ranging from $309-$355; Equity Residential EQR, two analysts, both raising it to $77; and Realty Income Corp O, two analysts with raises to $61 and $62.

All in all, 39 price target increases were reported in one day. But the celebration wasn't quite finished. On Aug. 27, 2024, Lewis became the fourth analyst in two days to report on Essex Property Trust. Lewis maintained Essex with a Hold rating and raised the price target from $282 to $294.

Lewis also maintained a Hold on AvalonBay Communities, NexPoint Residential Trust Inc NXRT and BXP Inc BXPm raising the price targets from $213 to $230, $37 to $46 and $67 to $77 respectively.

Not wanting to miss out on all the fun, Goldman Sachs analyst Caitlin Burrows maintained Vornado Realty Trust VNO with a Sell while raising the price target from $19 to $21.50. There have now been nine price target hikes on Vornado Realty since August 5, when it reported earnings that beat the estimates on FFO and revenue.

So, what do 39 price target hikes in one day signify? It means that analysts are scrambling to readjust the numbers, based on the assumption that the Fed will be lowering rates at least once and perhaps several times between now and next August.

REITs have rallied strongly over the past month in anticipation of this Fed announcement. Vornado Realty has risen 16.15%, Mid-America Apartments 12.93% and Camden Property Trust 10.27% since August 1. The analysts raising price targets certainly believe there's more to come and, perhaps after a small pullback or some sideways trading, could be right.

Better Yields Than Some REITs?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through REITs.

Arrived Homes, the Jeff Bezos-backed investment platform has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

As long-term rates go down and short-term rates stay high, there’s a unique chance to invest in fix & flip loans before yields drop. Check out Benzinga's favorite high-yield offerings.