Jefferies Raises Price Target on Equity Residential (EQR), Solid Position With Positive Potential

Jefferies is maintaining its Hold rating on shares of Equity Residential (NYSE: EQR), but is raising its price target from $52 to $55 as people rent the life thy can not afford to live.

So far in 2011 the company has sold $792 million in assets and has another $200 million under contract, while its has only completed $239 million in acquisitions with an additional $250 million under contract.

The firm comments that, "Based on mgmt's guidance, EQR will be a net seller of assets in 2011, with $1B of acquisitions and $1.25B of dispositions. This net seller position, combined with front-loaded dispositions and more evenly-weighted acquisitions, should limit 2011 FFO/sh growth somewhat. We view this portfolio-pruning process as a positive, despite the near-term earnings dilution."

Jefferies is tweaking its FY11 and FY12 FFO estimates from $2.49 and $2.89 to $2.46 and $2.90 and notes that shares of EQR are currently trading at a 23.2x P/ FFO multiple, which compares to its 5-year average multiple of 17.7x, and the Apartment REIT industry average multiple of 22.2x.

For more ratings news on Equity Residential click here and for the rating history of Equity Residential click here.

Shares of Equity Residential closed at $59.53 yesterday.

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