Morgan Stanley Raises Price Targets On A Half Dozen REITs

It's always interesting to see the nuances of consistency when analysts raise price targets on stocks. Often, they will increase price targets on groups of stocks in a certain sector. Sometimes an analyst will announce price hikes that are similar to one or two other analysts from the same firm on the same day. Is that a coincidence? It doesn't seem to be.

For example, on Feb. 26, three Morgan Stanley analysts maintained Equal-Weight ratings on six different REITs, while raising the price targets on all of them. Take a look at the similar conclusions the three analysts reached on all six.

Mid-America Apartment Communities Inc. MAA is a self-administered residential REIT that specializes in purchasing and leasing apartment complexes. As of Dec. 31, it owns 102,662 units in 276 communities across 16 states and Washington, D.C. Most of Mid-America Apartment Communities' properties are in the Southeast, Southwest and Mid-Atlantic states.

Mid-America Apartment Communities is a member of the S&P 500 and has been a public company for almost 30 years. The Atlanta and Dallas areas comprise over 22% of its same-store net operating income. Mid-America has paid 119 consecutive quarterly cash dividends since its initial public offering (IPO) in 1994. At the end of the third quarter, same-store occupancy was 95.6%.

On Feb. 26, Morgan Stanley analyst Adam Kramer maintained Mid-America Apartment Communities with an Equal-Weight rating and raised the price target from $128 to $129.50.

Equity Residential EQR is a Chicago-based REIT that owns or invests in 305 apartment buildings with 80,683 units, located in larger and more affluent cities such as Boston, New York, Washington D.C, Seattle, San Francisco and Denver. Its third-quarter occupancy rate was 96%. Equity Residential has been a member of the S&P 500 since 2001.

Kramer also maintained Equity Residential with an Equal-Weight rating and raised the price target from $58 to $64.

Camden Property Trust  CPT is a Houston-based residential REIT that owns and manages over 240,000 square feet of apartment complexes in major cities across the U.S. Some of its apartment complexes also contain ground-floor retail space, offices or mixed-use space. It's a member of the S&P 500 and had its IPO in 1993. At the end of the third quarter, its occupancy level was 95.6%, down from 96.6% one year earlier.

Kramer remained consistent, maintaining Camden Property Trust with an Equal-Weight rating and raising the price target from $95 to $98.

Essex Property Trust Inc. ESS is a San Mateo, California-based residential REIT that acquires, develops and manages multifamily apartment communities on the West Coast of the U.S. Its portfolio includes 252 apartment communities, with approximately 62,000 apartment units in eight California and Washington state markets.

Essex was founded in 1971 and had its IPO in 1994 at $19.50 per share. It's been a member of the S&P 500 since 2014 and is an S&P Dividend Aristocrat with 30 years of increasing cash dividends.

Kramer maintained Essex Property Trust with an Equal-Weight rating and raised the price target from $227 to $230.

Simon Property Group Inc. SPG is an Indianapolis-based retail REIT that owns and leases over 250 properties, consisting of shopping malls, restaurants, outlet centers and entertainment venues. It has locations in the top 25 population markets across the U.S. Simon Property Group was founded in 1960 and launched its IPO in 1993. The occupancy rate for its U.S. malls and premium outlets at the end of the fourth quarter was 95.8%, up from 94.9% in the fourth quarter of 2022

On Feb. 5, Simon Property Group reported its fourth-quarter operating results. FFO of $3.69 per share easily beat the consensus estimate of $3.34. Revenue of $1.53 billion was ahead of estimates of $1.36 billion by 12.38% and was a 9.07% increase over fourth-quarter 2022 revenue of $1.4 billion.

Simon followed this up by raising its quarterly dividend from $1.90 to $1.95, the third dividend raise over the past year, and by announcing a new $2 billion common stock repurchase program over the next 24 months, another sign of optimism. This repurchase program replaces the previous $1.7 billion program that was to expire on May 16.

On Feb. 26, Morgan Stanley analyst Ron Kamdem maintained Simon Property Group with an Equal-Weight rating and raised the price target from $143 to $145.

Lamar Advertising Co. LAMR is a Baton Rouge, Louisiana-based specialty REIT, founded in 1902 that owns and leases 363,000 displays throughout the U.S. and Canada, including digital and print billboards, interstate logos and airport advertising formats. Lamar Advertising and Outfront Media Inc. OUT are the only two REITs exclusively devoted to billboard and display advertising.

On Feb. 26, Morgan Stanley analyst Benjamin Swinburne maintained Lamar Advertising with an Equal-Weight rating and raised the price target from $105 to $110.

All in all, it was quite a busy morning for Morgan Stanley.

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