Evercore ISI upgrades Equity Residential stock to Outperform on strong coastal markets

Investing.com - Evercore ISI upgraded Equity Residential (NYSE:EQR) from In Line to Outperform on Monday, while raising its price target to $75.00 from $74.00. The residential REIT, with a market capitalization of $26.19 billion, currently trades at a P/E ratio of 25.43 and offers a dividend yield of 4.14%. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.

The upgrade comes as Evercore maintains its quarterly and annual funds from operations (FFO) estimates for the residential real estate investment trust at $0.99 for Q2 and $3.99 for fiscal year 2025, positioning at the higher end of forecast ranges. InvestingPro data reveals that EQR has maintained dividend payments for 33 consecutive years, with investors anticipating the next earnings report on July 29.

Evercore projects 3.0% same-store revenue growth for Equity Residential in Q2, which is 30 basis points above the Street consensus, reflecting solid rent growth in the company’s core coastal markets while its Sunbelt markets remain soft.

The research firm also forecasts 3.0% same-store revenue growth for the full year, 10 basis points above consensus estimates.

Equity Residential’s own guidance for top-line growth in fiscal year 2025 ranges from 2.25% to 3.25%, according to Evercore’s research note.

In other recent news, Equity Residential held its 2025 Annual Meeting of Shareholders, where all ten nominees for the board of trustees were elected to serve one-year terms. Shareholders also ratified Ernst & Young LLP as the company’s independent registered public accounting firm for 2025 and approved executive compensation on an advisory basis. Additionally, Equity Residential announced a new distribution agreement and forward sale agreements, allowing for the sale of up to 13 million common shares through "at the market" offerings. This agreement involves a consortium of banks, including JPMorgan Chase (NYSE:JPM) Bank and Barclays (LON:BARC) Bank PLC, and includes a share repurchase program authorized for up to 13 million common shares.

In the realm of analyst activity, Stifel analysts maintained their Buy rating for Equity Residential, citing positive fundamentals for the second quarter despite a slight downgrade in RevPAR estimates for 2025/2026. The analysts expressed confidence in the company’s performance and future prospects. Meanwhile, the political landscape in New York has raised concerns for real estate investors, as Zohran Mamdani’s lead in the Democratic mayoral primary has sparked fears of potential rent control policies. These developments have created a challenging environment for New York-based real estate investment trusts, including Equity Residential, amid ongoing pressures from elevated interest rates and reduced demand for office space.

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