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Investing.com - Mizuho downgraded AvalonBay Communities (NYSE:AVB) from Outperform to Neutral on Thursday, while lowering its price target to $199.00 from $213.00. According to InvestingPro data, the $27.2 billion residential REIT currently trades at a P/E of 23x and offers a 3.66% dividend yield, having maintained dividend payments for 32 consecutive years.
The downgrade reflects anticipated core growth challenges for the real estate investment trust, particularly weakness in its Los Angeles portfolio and additional risks in Washington DC, Boston, and Seattle markets.
Mizuho expects these regional challenges to drive a deceleration in same-store revenue and funds from operations (FFO) in 2026 for the residential property owner.
The firm also cited AvalonBay’s suburban-focused portfolio as facing tougher rent comparisons and return-to-office related headwinds that could impact performance.
While acknowledging that AvalonBay’s development pipeline continues to create value, Mizuho noted that development yields face pressure from slower lease-ups and rising input costs.
In other recent news, AvalonBay Communities reported its second-quarter 2025 earnings, showcasing a significant earnings per share (EPS) beat. The company achieved an EPS of $1.88, exceeding the forecasted $1.20, representing a 56.67% surprise. However, the revenue fell short of expectations, coming in at $689.9 million compared to the anticipated $757.59 million, marking an 8.93% miss. In related developments, Morgan Stanley upgraded AvalonBay Communities from Equalweight to Overweight, despite slightly lowering its price target from $228.00 to $225.00. The upgrade was based on AvalonBay’s position as the worst-performing apartment stock year-to-date, which Morgan Stanley sees as a buying opportunity due to its valuation aligning with peers despite superior growth prospects. These recent developments highlight the mixed financial performance and analyst perspectives surrounding AvalonBay Communities.
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