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Analyst opinions weigh heavily on Wall Street. Therefore, investors can expect that if an analyst upgrades a stock or maintains a previous rating while increasing the price target, the stock price will likely increase.
Often, important company news is necessary for an analyst to upgrade a stock or raise its price targets. It’s also interesting to note when other analysts have reduced the price target or downgraded a stock and a new analyst reverses that trend.
Take a look at three real estate investment trusts (REITs) from different subsectors that just received new price targets:
Crown Castle Inc. (NYSE:CCI) is a specialty REIT based in Houston, Texas that owns, operates and leases cell towers on a long-term basis. It has more than 40,000 cell towers, 90,000 kilometers of fiber optic cable and 115,000 small cells. Crown Castle designs and builds custom wireless coverage and fiber optic networks for businesses and governments.
The past few months have been difficult for Crown Castle as the board battled against a group of activist investors led by former CEO Ted Miller and Elliott Investment Management. Miller criticized Crown Castle’s board and management for disappointing shareholders by underperforming for several years. Public notices to shareholders became so heated that the board was forced to remove new CEO Steven Moskowitz’s name as a board member to avoid a lawsuit from Ted Miller.
Miller correctly assessed that the REIT’s stock price has been performing poorly. At the start of January 2022, Crown Castle was trading near $188. It recently closed at $99.10. On May 30, Jim Cramer of CNBC’s “Mad Money” supported Miller’s view when he recommended avoiding Crown Castle while noting that it had been mismanaged.
Fortunately, the board finally decided to take action. On June 11, Crown Castle announced it would make operational changes, including reducing capital expenditures by $275 million to $325 million in its much-criticized fiber segment and saving an additional $60 million in expenses by laying off 10 % of its staff and closing certain offices. The company further indicated that it is reviewing its fiber and small cell divisions with the intention of increasing revenue in these areas.
One analyst was impressed by the council’s statement. On June 14, Raymond James analyst Ric Prentiss reiterated Crown Castle with an outperform rating and raised the price target from $124 to $126. The analyst probably liked what he heard in the June 11 announcement. This is important because several analysts have cut price targets for Crown Castle in April and May 2023. Wells Fargo analyst Eric Luebchow lowered the price target from $115 to $100 and RBC analyst Capital Jonathan Atkin cut it from $109 to $100.
Essex Property Trust (NYSE:ESS) is a residential REIT that owns and operates 254 apartment communities with more than 62,000 units in the West Coast states of California and Washington. Essex is a member of the S&P 500 and a Dividend Aristocrat, with 30 years of growing dividends.
On April 30, Essex Property Trust reported first-quarter funds from operations (FFO) of $3.83 per share, beating the consensus estimate of $3.75. However, its revised full-year 2024 FFO forecast from $15.03 to $15.43 fell short of the $15.52 estimate.
Nonetheless, on June 14, Scotiabank analyst Nicholas Yulico maintained Essex Property Trust with a sector outperform rating and raised the price target from $283 to $285. This is the second increase to analyst Yulico’s price target on Essex in the past month.
Two other analysts, James Feldman of Wells Fargo and Vikram Malhotra of Mizuho, ​​recently kept Essex at Equal-Weight and Buy. Feldman increased the price target from $232 to $269 and Malhotra increased it from $250 to $266.
Health care Real Estate Trust Inc. (NYSE:HOUR) is a Nashville, Tennessee-based healthcare REIT with 687 properties spanning 40.3 million square feet in 35 states. Founded in 1992 with just 21 facilities, it has evolved into a delivery model in which 72% of its properties are multi-tenant ambulatory medical services buildings located on the campus of hospitals or other health care facilities. Its first quarter occupancy rate was 92.8%, a marked improvement from 85.2% in 2023.
In 2022, Healthcare Realty merged with Healthcare Trust of America in an $18 billion deal, becoming Healthcare Realty Trust. The main locations of its properties include Dallas, Seattle and Houston.
On May 7, Healthcare Realty reported first-quarter 2024 FFO of $0.39 per share, beating the consensus estimate of $0.38 but down slightly from $0.40 per share in first-quarter 2023. Revenue of $326.81 million was just below the consensus estimate of $326.89 million, down from $332.93 million in the first quarter of 2023.
Health Care Realty also reaffirmed its previous full-year 2024 FFO forecast of $1.52 to $1.58, matching the consensus estimate.
On June 14, Wells Fargo analyst Joseph Feldman kept Healthcare Realty Trust at Equal Weight and raised the price target from $16 to $17. This is the second time analyst Feldman has raised the price target by $1 in the last two weeks, which bodes well for Healthcare Realty moving forward.
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