Nobody likes to begin Monday morning hearing bad news, but that’s what happened this week to investors when Wolfe Research analyst Andrew Rosivach downgraded four real estate investment trusts (REITs) to kick off the new market week.
Analysts carry a lot of weight, and when one or more downgrades a stock, it can cause shares to drop by several percentage points in just a few days. For example, on March 23, Barclays Investment Bank analyst Anthony Powell downgraded SL Green Realty Corp. (NYSE: SLG) from Equal-Weight to Underweight. SL Green closed at $21.37 the previous day, but on the day of the downgrade, it closed at $19.49, down 8.7%.
The reverse is also true, in that analyst upgrades can cause stocks to spike higher quickly. But on this day, apartment REITs were set to sell off following Rosivach’s report. Take a look at the four REITs that were downgraded by this analyst:
Essex Property Trust Inc. (NYSE: ESS): Rosivach downgraded Essex Property Trust from Peer Perform to Underperform.
Mid-America Apartment Communities Inc. (NYSE: MAA): He downgraded Mid-America Apartment Communities from Peer Perform to Underperform, while announcing a price target of $137.
UDR Inc. (NYSE: UDR): Rosivach downgraded UDR from Outperform to Peer Perform and announced a price target of $71.
Camden Property Trust (NYSE: CPT): Rosivach downgraded Camden Property Trust from Outperform to Peer Perform.
Shortly after Rosivach’s downgrade, Bank of America Securities analyst Joshua Dennerlein also downgraded Camden Property Trust from Buy to Neutral, while cutting the previous price target from $132 to $121.
The downgrades are interesting because recently these REITs had performed well according to first-quarter operating results and had received favorable ratings from other analysts.
At the end of April, JMP Securities reiterated a Market Outperform on Mid-America Apartment, and RBC Capital Markets maintained a Sector Perform rating on it. Mid-America Apartment increased its first-quarter funds from operations (FFO) from $1.97 to $2.28 year over year, beating its first-quarter 2022…
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