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Investing.com - Barclays upgraded AvalonBay Communities (NYSE:AVB) from Equalweight to Overweight on Tuesday, while adjusting its price target to $216.00 from $229.00. The residential REIT, with a market capitalization of $25.5 billion, currently trades at $180.41, offering a 3.88% dividend yield.
The upgrade comes despite AvalonBay’s challenging third-quarter performance, which Barclays described as "one of the toughest" in its residential coverage. The firm believes positive factors now outweigh negatives at the stock’s current valuation. According to InvestingPro, AvalonBay has maintained dividend payments for 32 consecutive years, demonstrating resilience through market cycles despite currently appearing overvalued based on Fair Value analysis.
Barclays highlighted that AvalonBay should deliver sector-leading earnings growth next year, driven by incremental development NOI contribution offsetting what would otherwise be average same-store NOI performance. This outlook aligns with the company’s recent revenue growth of 6.49% and its "GOOD" overall financial health score from InvestingPro.
The firm also noted that AVB stock has already absorbed much of the negative news, given its significant underperformance over the past 30 days, 90 days, and year-to-date periods compared to other apartment REITs.
Barclays pointed to AvalonBay’s approximately $150 million stock repurchase during the third quarter as a significant positive indicator, noting such buybacks are "a rare occurrence among Apartment REITs."
In other recent news, AvalonBay Communities Inc. reported its second-quarter earnings with an EPS of $2.68, surpassing the forecast of $1.37. However, the company’s revenue of $682.36 million fell short of the expected $767.25 million. S&P Global Ratings revised its outlook for AvalonBay to positive from stable, citing the company’s strong balance sheet and solid operating performance. In the third quarter of 2025, AvalonBay reported a same-store residential revenue growth of 2.3% year-over-year, while operating expenses increased by 4.6%, resulting in a net operating income growth of 1.1%.
RBC Capital lowered its price target for AvalonBay to $197 from $202, maintaining a Sector Perform rating, following a significant late-year guidance cut. Additionally, Conor Flynn, CEO of Kimco Realty Corporation, was appointed as an independent director on AvalonBay’s Board of Directors. These developments highlight a mix of positive outlooks and challenges for AvalonBay Communities in recent times.
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