Deutsche Bank Upgrades AvalonBay Communities (AVB) to Buy; Valuations Look More Attractive After Recent Pullback

Deutsche Bank upgraded AvalonBay Communities (NYSE: AVB) from Hold to Buy, price target cut $2 to $137.

Deutsche analyst says, "Having both pulled back by 13% since August 31, BRE Properties (NYSE: BRE) and AVB are now trading at implied cap rates of 5.7% and 4.8%, respectively, which compare favorably to coastal market multifamily direct cap rates in the low-4% range. With upside potential to our target prices of 22% for BRE and 15% for AVB, and in conjunction with our “Rent or Buy” report released today which highlights the relative attractiveness of their markets, we are taking this opportunity to upgrade both stocks."

"For AVB, we are adjusting our 2011 FFO estimate to $4.63 (from $4.76) to reflect 2Q run rates and the company’s recent 5.1MM share equity offering. Our 2012 FFO estimate is now $5.48 (from $5.49)."

For more ratings news on AvalonBay Communities click here and for the rating history of AvalonBay Communities click here.

Shares of AvalonBay Communities closed at $118.86 yesterday.

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