There’s an old saying on Wall Street to “sell in May and go away.” While that may be true for some stocks, it won’t necessarily hold true for some real estate investment trusts (REITs) that began the first full week in June on a high with analyst upgrades.
Take a look at three REITs that could benefit from some positive analyst words this week:
DigitalBridge Group Inc. DBRG is a Boca Raton, Florida-based diversified REIT that owns and operates data centers as well as cell towers, digital infrastructure, fiber networks, real estate and other businesses. As of March 31, its platform manages nearly $69 billion of assets on behalf of its limited partners and shareholders. DigitalBridge Group was founded in 2009.
DigitalBridge Group has a 52-week range of $9.99 to $23.44. The past 18 months have been difficult for investors as DigitalBridge’s share price has fallen from $34 to a low near $10 in early May. Weaker-than-expected first-quarter funds from operations (FFO) and revenue did not help. But the share price seems to be in recovery mode and year to date, DigitalBridge has a total return of 22.03%.
On June 5 Keefe, Bruyette & Woods analyst Jade Rahmani upgraded DigitalBridge Group from Market Perform to Outperform and raised the target price from $12.50 to $17.50.
From its most recent closing price of $12.84, that represents a potential gain of 36%. Earlier in May, RBC Capital Markets reiterated its Outperform rating on DigitalBridge and maintained a $14 price target.
Last September, DigitalBridge reinstated a quarterly dividend of $.01 that was eliminated in March 2020. It would seem that better days are ahead for this REIT.
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Clipper Realty Inc. CLPR is a small, New York-based, self-administered and self-managed REIT that owns, manages, operates and repositions multifamily residential and commercial properties in the New York City area. It was formed in 2017.
On June 5, Raymond James Equity Research analyst Buck Horne upgraded Clipper Realty from Market Perform to Outperform and announced a $7 price target. Horne feels the valuation is too attractive to ignore at the current price. From its most recent closing price of $5.69, that represents a potential gain of 23%.
Clipper Realty is another REIT that has recently recovered from a long-term poor performance. The share price had fallen from $9.50 at the start of 2022 to $5 in mid-May. Since then, it has bounced back almost 14%.
On May 4, Clipper Realty announced first-quarter adjusted funds from operations (AFFO) of $0.11, up from $0.10 in the first quarter of 2022. Revenue of $433.67 million was 3.95% below analysts’ estimates, but 5.05% higher than revenue of $32.05 million in the first quarter of 2022.
Clipper Realty pays a quarterly dividend of $0.095 per share. The annual dividend of $0.38 yields 6.67%.
Equity Residential EQR is a Chicago-based REIT that owns or is invested in 301 apartment buildings with 79,351 units in large urban areas such as Boston, New York, Washington D.C, Seattle, San Francisco and Denver. It’s a member of the S&P 500.
On June 5, BMO Capital Markets analyst John Kim upgraded Equity Residential from Underperform to Market Perform and raised his price target from $60 to $64. From its most recent closing price of $63.09, that represents a potential gain of 1.4%.
On May 31, RBC Capital analyst Brad Heffern maintained an Outperform rating on Equity Residential, while raising his price target from $70 to $71. That represents a potential gain of 12.5%.
Equity Residential pays an annual dividend of $2.65, which currently yields 4.3%. The dividend has grown 22.7% over the past five years with no cuts or eliminations over that time. Year to date, Equity Residential has a total return of 8.35%.
Investors are cautioned to perform their own due diligence on any stock they’re considering for purchase and not to buy a stock just because of an analyst upgrade or increase in price target. Analysts are only correct about 50% of the time, but it is true that upgrades can increase the share price of a stock over the short term.
Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.
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