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Analysts’ views weigh heavily on Wall Street. Therefore, investors can expect that if an analyst upgrades a stock or maintains a previous rating while raising the price target, the stock price will likely rise.
It often takes major company news before an analyst can upgrade a stock or raise price targets. It’s also notable when other analysts have lowered 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:
Kroon Kasteel Inc. (NYSE:CCI) is a Houston, Texas-based specialty REIT that owns, operates and leases long-term cell towers. It owns more than 40,000 cell towers, 90,000 route miles of fiber and 115,000 small cells. Crown Castle designs and builds customized wireless coverage and fiber optic networks for companies and governments.
The past few months have been difficult for Crown Castle as the board has battled an activist investor group led by former CEO Ted Miller and Elliott Investment Management. Miller criticized Crown Castle’s board and management for disappointing shareholders by underperforming for years. The public notices to shareholders became so intense that the board was forced to withhold the name of new CEO Steven Moskowitz as a board member to avoid a lawsuit from Ted Miller.
Miller correctly assessed that the REIT’s share price has performed poorly. In early January 2022, Crown Castle was trading around $188. It recently closed at $99.10. On May 30, Jim Cramer of CNBC’s “Mad Money” show supported Miller’s views when he recommended avoiding Crown Castle, while noting that it was poorly managed.
Fortunately, the board eventually decided to take action. On June 11, Crown Castle announced it would make operational changes, including cutting capital expenditures by $275-$325 million in its heavily criticized fiber optic segment and cutting an additional $60 million in costs by laying off 10% of its workforce and cutting some offices to close. It further noted that it is reviewing its fiber and small cell divisions with plans to increase revenues in those areas.
One analyst was impressed by the Board of Directors’ 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 from the June 11 announcement. This is important because several analysts have lowered their price targets for Crown Castle in April and May 2023. Wells Fargo analyst Eric Luebchow lowered the price target to $100 from $115 and RBC Capital analyst Jonathan Atkin lowered it to $100 from $109.
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 rising dividends.
On April 30, Essex Property Trust reported first-quarter fund from operations (FFO) of $3.83 per share, beating the consensus estimate of $3.75. However, the revised full-year 2024 FFO guidance of $15.03-$15.43 missed the $15.52 estimate.
Nevertheless, on June 14, Scotiabank analyst Nicholas Yulico maintained the Essex Property Trust with a Sector Outperform rating and raised the price target from $283 to $285. This was analyst Yulico’s second price target increase for Essex in the past month.
Two other analysts, James Feldman of Wells Fargo and Vikram Malhotra of Mizuho, recently held Essex at Equal-Weight and Buy. Feldman raised the price target from $232 to $269 and Malhotra raised it from $250 to $266.
healthcare Real Estate Trust Inc (NYSE:HR) is a Nashville, TN-based healthcare REIT with 687 properties spanning 40.3 million square feet across 35 states. Founded in 1992 with just 21 facilities, it has grown to a delivery model in which 72% of properties consist of multi-tenant medical outpatient buildings on the campus of hospitals or other healthcare facilities. The occupancy rate in the first quarter was 92.8%, a huge improvement compared to 85.2% in 2023.
In 2022, Healthcare Realty merged with Healthcare Trust of America in an $18 billion deal to become Healthcare Realty Trust. The properties’ prime locations are Dallas, Seattle and Houston.
On May 7, Healthcare Realty reported Q1 2024 FFO of $0.39 per share, beating the consensus estimate of $0.38 but down slightly from $0.40 per share in Q1 2023. Revenue of $326.81 million was just below the consensus estimate of $326.89 million, down from $0.40 per share in Q1 2023. $332.93 million in Q1 2023.
Health Care Realty also reaffirmed its previous full-year 2024 FFO guidance of $1.52-$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 was the second time in the last two weeks that analyst Feldman raised the price target by one dollar, and that bodes well for Healthcare Realty going forward.
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This article These 3 REITs Just Got Price Target Hikes originally appeared on Benzinga.com
