Equity Residential Experiences Mixed Reactions Post Q3 Earnings Report
Company Overview and Performance Metrics
Chicago-based Equity Residential (EQR) is a key player in the rental apartment market, focusing on the acquisition, development, and management of properties. With a market cap standing at $27.9 billion, it ranks among the major publicly traded multi-family real estate investment trusts (REITs) in the U.S.
Stock Performance Compared to Market Benchmarks
Though EQR has outperformed the broader market over the last year, it faced slight underperformance in 2024. The stock rose by 20.3% this year and 31.6% over the past twelve months. In comparison, the S&P 500 Index ($SPX) gained 23.1% year-to-date and 30.4% over the last year.
When compared to the iShares Global REIT ETF (REET), EQR showed stronger gains as well, outpacing REET’s 5.2% increase in 2024 and 16.2% over the previous year.
Q3 Earnings Report: A Mixed Bag
After reporting earnings on October 30, Equity Residential’s stock saw a sharp decline of 4.8% despite an unexpected rise in revenues. The rental revenues grew by 3.4% year-over-year, and normalized funds from operations (FFO) per share rose by 2.1% to $0.98.
However, these positive numbers were dampened by a significant 16.7% decline in net income, which fell to $143.1 million, missing analyst expectations. The expenses for same-store properties increased by 3.2%, outpacing the 2.7% rise in same-store revenues. Such pressures on margins raised concerns for investors regarding EQR’s profitability sustainability.
Future Outlook and Analyst Recommendations
Looking ahead to the current fiscal year ending in December, analysts predict a 2.7% year-over-year growth in normalized FFO, reaching $3.88. Notably, EQR has a solid track record, having beat or met analysts’ FFO expectations in the last four quarters.
Currently, EQR holds a consensus “Moderate Buy” rating from analysts. Out of 26 covering the stock, 10 recommend “Strong Buy,” one suggests “Moderate Buy,” and 15 place a “Hold” on it. This outlook is more optimistic than it was three months ago, where only eight analysts rated it as a “Strong Buy.”
Price Targets and Investment Insights
On November 1, RBC Capital analyst Brad Heffern reiterated an “Outperform” rating for EQR, but adjusted the price target to $79. EQR’s average price target is now $78.17, which offers a modest premium of 6.2% from current levels. The highest price target on Wall Street is $90, indicating a possible upside of 22.3%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
