With a market cap of $33.8 billion, AvalonBay Communities, Inc. (AVB) is a leading equity REIT specializing in developing, acquiring, and managing upscale apartment communities in high-barrier-to-entry metropolitan areas across the United States. The Arlington, Virginia-based company specializes in regions with rising employment, high homeownership costs, and a strong quality of life.
Shares of the apartment building owner have outperformed the broader market over the past 52 weeks. AVB has risen 39.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 32.3%. In 2024, shares of AVB are up 27%, compared to SPX’s 26.2% gain on a YTD basis.
Zooming in further, AVB’s outperformance becomes more evident when compared to the Real Estate Select Sector SPDR Fund’s (XLRE) 22.7% gain over the past 52 weeks and 13.1% return on a YTD basis.
Shares of AvalonBay rose 3.6% following its Q3 earnings release on Nov. 4, as the company reported core FFO per share of $2.74, exceeding the consensus estimate and reflecting a 3% year-over-year increase. Total revenue for the quarter reached $734.3 million, surpassing expectations, driven by a 3.1% rise in same-store residential revenues. Additionally, AvalonBay raised its full-year core FFO per share outlook to a range of $10.99 to $11.09, signaling stronger growth than previously anticipated.
For the current fiscal year, ending in December, analysts expect AVB’s FFO to grow 3.8% year-over-year to $11.03 per share. The company’s earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 23 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, two “Moderate Buys,” and 14 Holds.”
On Nov. 15, Argus raised its price target on AvalonBay to $245, maintaining a “Buy" rating due to the REIT's strong geographic exposure, growing asset development plans, and financial strength. The firm highlighted that while AvalonBay had slowed its asset pipeline due to high borrowing costs and a weak economy, 2024 has seen a sequential uptick in development and acquisitions.
As of writing, AVB is trading slightly below the mean price target of $237.80. The Street-high price target of $270, implies a potential upside of 13.6% from the current price.
