INVH - Equity Residential AvalonBay cut to Sell at Deutsche Bank due to rich valuations

Deutsche Bank analyst Derek Johnston downgrades Equity Residential (EQR) and AvalonBay Communities (AVB) to Sell as rich valuations, reduced earnings power, uncertainty, and likelihood that it may take two to four years for the two coastal apartment REITs' operating metrics to return to 2019 levels have led to decade-high normalized FFO multiples."Both could see trough earnings this year and thus provide a runway for growth, albeit from a lower base," Johnston adds.He also points out that 2021 consensus estimates stand lower for both companies than their actual2019 pre-COVID normalized FFO per share results.Johnston is more constructive on the single-family rental — Invitation Homes (INVH); student housing — American Campus Communities (ACC); and Sunbelt/suburban apartment REITs — Camden Property Trust (CPT), Independence Realty Trust (IRT), and Kennedy-Wilson Holdings (KW).

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Equity Residential, AvalonBay cut to Sell at Deutsche Bank due to rich valuations