Investing.com -- Raymond James upgraded Essex Property Trust Inc to "outperform" from "market perform" and raised its target price to $320 per share from a previous rating that was not meaningful.

Analysts said the real estate investment trust is "the biggest residential beneficiary of the extraordinary boom currently being felt across the San Francisco Bay Area economy," with 40% of its net operating income derived from Northern California.

Rental demand and pricing momentum across the region "has only continued to accelerate through June," driven by the artificial intelligence boom and related wealth effects, the broker said.

Raymond James said its rent tracking data showed "levels of regional pricing power not seen since the height of the dot-com era over 25 years ago," with asking rents in San Francisco and San Jose tracking up 10.2% and 6.2% year-over-year, respectively. The demand surge is also spreading into Alameda and Contra Costa counties.

The broker said it had grown "too cautious" in late February given a sluggish start to 2026 leasing demand, but rental demand "has steadily improved in most markets over the past 90 days" following geopolitical turmoil in March and another weak spring season for for-sale housing.

"Only Essex’s markets are accelerating to a degree that gives us confidence that consensus estimates are still likely too low and guidance is increasingly beatable," the broker said.

Raymond James pointed to private market interest in Camden’s Southern California portfolio sale, with "market chatter seeming to coalesce around ~4.5% cap rate pricing."

Current pricing implies a roughly 5% cap rate on Essex’s entire portfolio, the broker said, adding that the pace of revenue momentum allows for "substantial multiple expansion potential."

Raymond James raised its 2026 and 2027 core FFO per share estimates to $16.12 and $17, from $16.05 and $16.75 previously. Its net asset value estimate rose to $320.32 per share.

The analysts said Essex shares currently trade at an 11% discount to its revised NAV estimate and 18.9 times its 2027 estimated AFFO, a slight premium to peer average supported by what it called the company’s "peer-leading revenue growth."

Essex closed at $285.57 on June 25, 2026, giving it a market capitalization of $18.99 billion. The stock’s 52-week range is $238.46 to $294.09.

Raymond James said it expects to receive or seek compensation for investment banking services from Essex Property Trust within the next three months, and that the firm makes a market in the company’s shares.