Arlington, Virginia-based AvalonBay Communities, Inc. (AVB) is a real estate investment trust focused on developing, acquiring, owning, and operating multi-family apartment communities. With a market cap of $31.5 billion, AvalonBay operates in high-barrier-to-entry markets like the New York metro area, New England, Southern California, and more.
Shares of the REIT have underperformed the broader market over the past year. Despite rallying 22.7% over the past 52 weeks, AVB lagged behind the S&P 500 Index’s ($SPX) 27% returns during the same time frame. However, in 2024, AVB is up 18.4%, slightly outperforming SPX’s 18.1% gains on a YTD basis.
Narrowing the focus, AVB has outperformed the DJ REIT ETF SPDR’s (RWR) 17.2% returns over the past 52 weeks and 9.2% gains on a YTD basis.
Shares of AvalonBay surged 4% in the subsequent trading session following its Q2 earnings release on Jul. 31. The company reported a 5.1% annual revenue growth to $726 million. However, its net income attributable to common stockholders fell by 31% to $253.9 million, primarily due to a 63.4% yearly drop in gains from the sale of communities to $68.6 million.
Despite this, AvalonBay’s core funds from operations (FFO) per share grew by 4.1% yearly to $2.77, surpassing Wall Street’s consensus estimates by 2.2%. Moreover, it has raised the full-year core FFO per share growth guidance from a previously announced 2.6% to 3.7%, making investors enthusiastic.
For the current fiscal year ending in December, analysts expect AvalonBay to report an annual FFO per share growth of 3.6% to $11.01. Moreover, the company has a history of surpassing Wall Street’s FFO per share estimates in its quarterly earnings reports.
Among the 23 analysts covering the AVB stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, two “Moderate Buys,” and 14 “Holds.”
This configuration has been consistent over the past months.
On Aug. 12, Evercore ISI Group analyst Steve Sakwa maintained an “In-Line” rating with a price target of $216.
Although AVB is trading above its mean price target of $215.09, the Street-high target of $255 represents a potential upside of 15% from current price levels.
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.
