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Piper Sandler upgrades UDR stock, citing Northeast market strength

EditorEmilio Ghigini
Published 04/10/2024, 04:42 AM

On Wednesday, Piper Sandler showed a shift in perspective on UDR, Inc. (NYSE:UDR) stock, elevating its rating from Underweight to Neutral and increasing the price target to $40.00 from the previous $34.00.

The adjustment is attributed to the robust performance of the Northeast market, particularly in New York City and Boston, which collectively contribute approximately 20% to UDR's net operating income (NOI).

The analyst from Piper Sandler pointed out that there has been no change to their earnings estimates for the company. However, the new price target reflects an updated 2024 estimated target multiple of around 16 times, up from the former multiple of 14 times. This revision aligns UDR's valuation more closely with that of Equity Residential (NYSE:EQR), which has a similar portfolio composition.

The firm's decision to upgrade UDR is based on the company's exposure to the Northeastern markets, which are currently demonstrating relative strength. This regional performance has been a key factor in the reassessment of UDR's investment outlook.

The analyst also outlined several risks that could impact UDR's future performance. These risks include various factors such as regulatory changes, quality of life issues, inflation, interest rates, broader economic trends, tax implications, and the supply of available properties in the market.

The updated price target of $40.00 represents a notable increase from the previous target, suggesting a more optimistic view of UDR's valuation based on the current market conditions and the company's strategic market presence in the Northeast.

InvestingPro Insights

With Piper Sandler's recent upgrade of UDR, Inc. (NYSE:UDR) to a Neutral stance and a raised price target, investors may find additional context in the company's financial metrics and market performance. UDR's adjusted market capitalization stands at $13.7 billion, reflecting its substantial presence in the real estate sector. The P/E ratio, a measure of the company's valuation, is currently at 28.22, with an adjusted P/E for the last twelve months as of Q4 2023 at a higher 88.61. This indicates expectations of future earnings growth, supported by a low PEG ratio of 0.07 for the same period, which suggests the stock may be undervalued relative to its earnings growth potential.

UDR's revenue growth for the last twelve months as of Q4 2023 was 6.22%, demonstrating a steady increase in income, although the quarterly revenue growth for Q4 2023 showed a slight contraction of -4.63%. The gross profit margin remains robust at 66.84%, indicating efficient cost management relative to revenue.

For investors seeking income, UDR's dividend yield as of early April 2024 is attractive at 4.57%, complemented by a significant dividend growth of 11.84% for the last twelve months as of Q4 2023. The company's next earnings date is set for April 23, 2024, which could provide further insights into its financial health and performance trajectory.

InvestingPro Tips suggest that investors consider the company's solid dividend yield and potential for dividend growth when assessing UDR's investment profile. For more comprehensive analysis and tips, subscribers can access additional insights on InvestingPro, with the opportunity to use coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 7 additional InvestingPro Tips available for UDR, Inc., offering a deeper dive into the company's potential and performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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