Shares of Equity Residential rose 0.9% in morning trading Tuesday, to outperform its real estate investment trust peers, after Mizuho analyst Haendel St. Juste turned bullish on the rental apartment REIT, citing an “intriguing risk/reward” following its recent underperformance. The gains come as the iShares Residential and Multisector Real Estate ETF edged up just 0.1%. St. Juste raised his rating on Equity Residential (EQR) to buy from neutral, saying EQR trades below its long-term valuation averages, and has a wider discount than its peers than historically. “Beyond valuation, we see two near-term catalysts that should benefit EQR — accelerating demand and pricing (particularly in [New York City]) that should support further rent growth and potential re-acceleration, as well as an anticipated [fiscal 2022] guidance increase,” St. Juste wrote in a note to clients. Meanwhile, he cut his stock price target to $84 from $92, given lower group multiples, but the new target still implies 12% upside from current levels. The stock has dropped 11.7% over the past three months, while the apartment and multisector REIT ETF has declined 6.1%, the SPDR Real Estate Select Sector ETF has slipped 4.6% and the S&P 500 has dropped 7.4%.
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