Canaccord Genuity reiterated a Hold rating on Essex Property Trust (NYSE: ESS), and raised the price target to $246.00 (from $239.00), following a review of the company's 2Q. New rents in the area decelerated from +9% in January, to +6% in March, to +4% in April, to up just +1.5% in July, which is cause for concern as the company is in its peak leasing season. However, absolute valuations have risen recently, as the stock now trades at an approximate 2% premium to NAV estimates. Canaccord now forecast 2016 core FFO of $11.04 vs. previous estimates of $10.98.

Analyst Ryan Meliker commented, "Despite ESS' FFO beat in the quarter, we remain critical of Northern California fundamentals after another quarter of deceleration which was accompanied by a lowering of fundamental guidance. Investors were encouraged by the relatively immaterial nature of this guidance change, as Seattle continues to buoy the rest of the portfolio and management maintains that this deceleration in the Bay Area is merely a temporary supply issue. However, we are less certain. In addition to slowing job growth, supply, and issues of affordability, we believe management teams and investors are less aware of the potential surge in supply from Airbnb and homesharing regulation, and we believe the aggregation of these issues will weigh on the high single NOI growth the Street has become accustomed to. With that being said, we believe ESS remains a consistent top performer among other blue-chip multifamily operators, and as such, we believe investors might view the stock as a safe haven in the multifamily space. However, while growth should still exceed peers, the deceleration in that growth could cause ESS' multiple relative to peers to contract. As such, we reiterate our HOLD rating but push our year-end price target out to 2017 and raise it to $246 on recent performance."

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Shares of Essex Property Trust closed at $233.88 yesterday.