Education Realty Trust (EDR) Stock Closed Higher, Canaccord Boosts Price Target

Education Realty Trust's (EDR) price target was raised to $51 from $45 at Canaccord this morning to reflect the promising students housing market.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of Education Realty Trust (EDR)  closed up by 0.78% to $46.73 on Monday, as Canaccord raised the company's price target to $51 from $45 this morning. The firm has a 'buy' rating on the stock. 

The price increase for the Memphis, TN-based collegiate housing company comes as a result of the firm's change to their "NAV valuation cap rate methodology."

Canaccord now uses a 4.3% cap rate for the on-campus portfolio and a 5.5% cap rate for the off-campus assets.  

"Without an on-campus transaction market it is difficult to understand the underlying value of these long-term assets, but we believe they offer a risk profile very similar to that of a university bond," the firm said. 

They have also increased the NAV premium to 15% from 10% as they expect "apartment investors to continue to rotate out of large cap multifamily stocks due to decelerating rent and NOI growth in the core primary markets and into student housing," Canaccord noted. 

Additionally, AirBnB offering long-term rentals in the next year could "pressure rent growth."

Lastly, Canaccord believes "a continued transition to stocks offering defensive fundamentals will drive student housing stock valuations higher." 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate EDUCATION REALTY TRUST INC as a Buy with a ratings score of B. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in net income, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

You can view the full analysis from the report here: EDR

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