Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Barclays ups AvalonBay share price target to $204, sees home deliveries doubling

EditorEmilio Ghigini
Published 02/20/2024, 04:46 AM
Updated 02/20/2024, 04:46 AM
© Reuters.

On Tuesday, Barclays made a notable adjustment to its stance on AvalonBay Communities, Inc. (NYSE:AVB), elevating the company's stock rating from Equal Weight to Overweight. Accompanying this upgrade, the firm also increased AvalonBay's price target to $204 from the previous $194.

The upgrade was attributed to AvalonBay's unique position among its coastal peers, marked by its exceptional development capabilities. The company is expected to deliver approximately 2,625 apartment homes in 2024, a figure that is more than double the deliveries made in 2023. These new developments are projected to contribute an additional $40 million in incremental net operating income (NOI) for the year 2024.

AvalonBay's operational model initiatives and developer funding programs are anticipated to continue propelling revenue growth throughout 2024. This is particularly significant given the backdrop of a moderating rent growth environment. Barclays' analyst highlighted that despite these conditions, AvalonBay's forecasted increase in apartment unit deliveries is a strong revenue driver.

The company's capital allocation strategy is also expected to shift, with AvalonBay likely to become a net seller in 2024. The proceeds from these sales are projected to be reinvested into further development activities. This strategy is deemed feasible due to the 10-year interest rate curve maintaining a low to mid 4% range.

However, Barclays also cautioned investors to be aware of potential challenges AvalonBay may face in the next year. These include the impact of disposition activities, an increase in interest expense due to anticipated debt financing activities in 2024, and a possible decline in interest income resulting from the company's above-average cash balance in the fiscal year 2023. These factors could present headwinds that the company will need to navigate.

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

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.