AvalonBay price target lowered to $245 from $249 at Deutsche Bank

Deutsche Bank analyst Omotayo Okusanya lowered the firm’s price target on AvalonBay (AVB) to $245 from $249 and keeps a Buy rating on the shares. In 2025, the firm is “tactically shifting” its preference in the residential real estate investment trust sector towards subsectors and specific stocks which should be least impacted by ongoing supply issues. As such, Deutsche moved to an overweight stance on manufactured housing. Judging by the recent Q4 updates, ongoing supply in sunbelt markets is likely to remain an issue in the multifamily subsector and impact 2025 earnings for sunbelt focused names, despite peak supply now behind the group, adds Deutsche Bank. The firm says the issue is that lease-up of Q4 of Q1, traditionally weaker demand periods, of this supply may lock in lower rates given the oversupply in these markets. On the flip side, west coast supply remains limited, and there may be a pickup in occupancy in Los Angeles following the fires, contends Deutsche. The firm adjusted ratings and price targets in the group as part of its 2025 outlook.