Raymond James Downgrades Essex Property Trust (ESS) to Market Perform

Raymond James analyst Buck Horne downgraded Essex Property Trust (NYSE: ESS) from Outperform to Market Perform.

The analyst comments: "Following its peer-performance over the past 12 months (+40% since 10/20/23), we believe ESS is approaching fair valuation, trading at 21.5x 2025E AFFO and at a ~10% premium to our last NAV estimate. That said, the latest refresh of our Costar asking rent analysis through October continues to indicate that Seattle and San Francisco (~26% of NOI) remain some of the best performing markets with asking rents growing 2.0% & 1.8% year-to-date, respectively. Moreover, ESS' West Coast exposure has insulated it against the supply pressure weighing on markets predominantly in the Sun Belt. That said, we are closely monitoring the level of support for Proposition 33 hitting California ballots in November, which aims to repeal rent control limits set forth in the Costa Hawkins Act. Given the uncertainty surrounding the success of this ballot measure and ESS shares trading at 21.5x 2025E AFFO (vs. peers at 21.0x), we believe now represents a good opportunity for investors to rotate into names with more near-term upside potential."

For an analyst ratings summary and ratings history on Essex Property Trust click here. For more ratings news on Essex Property Trust click here.

Shares of Essex Property Trust closed at $296.50 yesterday.

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