Analysts Weigh In On Three REITs With Upcoming Earnings

Fourth-quarter earnings season began this past week, with Prologis Inc.'s PLD earnings report leading the way for the real estate investment trust (REIT) sector.

After unusually strong performances throughout November and December, many REITs have come back down to Earth over the first few weeks of 2024. Analysts have raised price targets, but upgrades versus downgrades have been running about 50-50 across the REIT sector.

Take a look at three REITs with earnings reports coming out over the next two weeks that have recently seen price declines and whose ratings were recently evaluated by Wall Street analysts.

Crown Castle Inc. CCI is a Houston-based specialized REIT that owns, operates, and leases cell towers long-term. Crown Castle has more than 40,000 cell towers, 85,000 route miles of fiber and 120,000 small cells in its portfolio. It works with businesses and governments to design and build solutions that meet connectivity needs like wireless coverage and custom fiber optic networks.

Crown Castle was in the news last month after Elliott Investment Management released a letter to Crown Castle's board, detailing its views on the company's underperformance and calling for significant changes to the board and CEO. The letter sparked a surge in Crown Castle's share price in the fourth quarter of 2023, and on Dec. 20, the board announced the addition of two new independent directors. 

Crown Castle shares touched a peak of $117.90 but have since sold off to its most recent closing price of $107.79. Its annual dividend of $6.26 now yields 5.81%.

Some positive factors are at work as Crown Castle heads toward its earnings announcement. Its short percent of float has declined 27.05% since its last report. On Jan. 12, Jenny Harrington, CEO of Gilman Hill Asset Management was a guest on CNBC and gave Crown Castle a positive final trade mention for its dividend yield and its improving gross rates.

On Jan. 19, BMO Capital Markets analyst Ari Klein upgraded Crown Castle from Underperform to Market Perform and raised the price target from $107 to $110.

Crown Castle will announce its fourth-quarter earnings after the closing bell on Jan. 24. The funds from operations (FFO) consensus estimate is $7.39 per share, and revenue estimates are for $6.94 billion.

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Boston Properties Inc. BXP is a Boston-based office REIT with 190 properties totaling 53.5 million square feet concentrated in five large cities: Boston, Manhattan, New York, Washington, D.C., San Francisco and Seattle. The firm calls itself "the largest publicly traded developer, owner and manager of premier workplaces in the United States." Boston Properties is a member of the S&P 500.

As of the end of the third quarter, Boston Properties had a 90.4% occupancy rate with a weighted average lease term (WALT) of 7.5 years. That compares favorably with several other office REITs. About 10% of its office properties are in life sciences, which means little risk of its employees working from home.

Shares of Boston Properties have been selling off in the past week after peaking at $72.72 on Jan. 10. Its most recent closing price was $66.50. Last spring, Boston Properties was trading between $43 and $53, but two improved quarters in FFO since then along with three consecutive interest rate pauses from the Federal Reserve have helped Boston Properties' shares get back on track.

On Jan. 16, Truist Securities analyst Barry Jonas maintained Boston Properties with a Hold rating and lowered the price target from $79 to $77.

Boston Properties pays a quarterly dividend of $0.98. The annual dividend presently yields 5.89%.

Boston Properties will announce its fourth-quarter earnings after the closing bell on Jan. 30. The consensus estimate is for FFO of $7.27 per share and revenue of $3.28 billion.

Equity Residential EQR is a Chicago-based REIT that owns or invests in 301 apartment buildings with 80,683 units located in large urban areas, such as Boston, New York, Washington D.C, Seattle, San Francisco and Denver. Its third-quarter occupancy rate was 96%. Equity Residential is a member of the S&P 500.

Equity Residential shares ran up from $52.01 on Nov. 1 to an intraday high of $62.86 on Jan. 12 but have since pulled back to their most recent closing price of $59.39. The quarterly dividend of $0.6625 has an annual yield of 4.44%.

On Jan. 10, Mizuho analyst Vikram Malhotra maintained a Neutral rating on Equity Residential and raised the price target from $58 to $62.

Equity Residential will announce its fourth-quarter earnings after the closing bell on Jan. 30. The Street is looking for FFO of $3.78 per share and revenue of $2.87 billion.

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