Last Update17 Oct 25Fair value Decreased 1.05%
Analysts have slightly lowered their price target for UDR by approximately $0.45. They cite a cautious outlook on the multifamily sector and recent market dynamics that are impacting residential real estate investment trusts.
Analyst Commentary
Recent research coverage on UDR reflects a mix of optimism and caution among analysts, with ongoing adjustments to price targets and ratings amidst evolving market dynamics. Opinions range from slightly positive assessments related to execution and positioning, to increased caution given sector-wide headwinds and internal company changes.
Bullish Takeaways- Bullish analysts see UDR as well positioned over the next 12 to 24 months, despite currently muted enthusiasm for a sector-wide recovery.
- Positive sequential trends in asking rents were noted in recent months, suggesting UDR's properties are outperforming the broader market deceleration.
- Some analysts highlight that UDR's discounted valuation relative to other real estate investment trusts may provide an attractive entry point, with expectations for sentiment to improve as supply dynamics shift.
- Adjusted price targets upward in some research notes, reflecting longer-term AFFO projections being incorporated into valuation models.
- Bearish analysts are more cautious on the multifamily and hotel sectors, pointing to slower rent growth and diminished near-term recovery prospects.
- Lowered price targets have reflected broader underperformance within apartment REITs and persistent market headwinds.
- Uncertainty around leadership changes, including the unexpected resignation of a key executive, has added an additional layer of risk to execution confidence.
- Preference for alternative apartment REITs at current pricing, with some analysts maintaining neutral or hold ratings amid decelerating national job and rent growth.
What's in the News
- UDR repurchased a total of 2,973,363 shares, representing 0.97 percent of the company for $111.32 million under its buyback program. No shares were repurchased in the latest period from April 1, 2025 to June 30, 2025 (Key Developments).
- UDR updated its full year 2025 earnings guidance, now expecting net income per diluted share between $0.53 and $0.59, compared to previous guidance of $0.56 to $0.66 per share (Key Developments).
- The company provided earnings guidance for the third quarter of 2025, projecting net income per diluted share between $0.11 and $0.13 (Key Developments).
Valuation Changes
- Fair Value Estimate has decreased slightly from $43.48 to $43.02 per share.
- Discount Rate edged up marginally, now at 7.31% compared to 7.31% previously.
- Revenue Growth Estimate increased slightly, rising from 3.56% to 3.57%.
- Net Profit Margin softened modestly, now at 11.51% compared to the prior 11.70%.
- Future Price-to-Earnings (P/E) Ratio increased a little, moving from 80.78x to 81.23x.
Key Takeaways
- Strong rental demand and strategic market focus are driving revenue and rent growth while minimizing downside risk.
- Innovation and disciplined capital allocation are improving operational efficiency, margins, and long-term earnings potential.
- Prolonged supply pressures, regulatory risks, rising costs, and demographic shifts threaten rental growth, occupancy, margins, and long-term portfolio and earnings expansion.
Catalysts
About UDR- UDR, Inc. (NYSE: UDR), an S&P 500 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate communities in targeted U.S.
- Declining affordability of homeownership and persistent housing shortages are driving increased demand for multifamily rentals, as evidenced by strong year-to-date occupancy (averaging near 97%) and record apartment absorption, positioning UDR for sustained revenue and rent growth.
- Urban migration patterns, combined with better-than-expected job and wage growth in core coastal cities like San Francisco, Seattle, Boston, and D.C., are supporting ongoing high occupancy and high renewal rent growth, which should enhance UDR's top-line revenue and minimize downside risk.
- Portfolio optimization-rotating out of lower-growth assets into higher-yielding East/West Coast and selected Sunbelt markets with robust fundamentals-continues to support higher average rent roll growth and NOI expansion, improving UDR's earnings trajectory.
- Innovations such as smart home upgrades, customer experience initiatives, and offering value-added services (leading to double-digit other income growth) are driving operational efficiencies and tenant retention, likely supporting higher margins and long-term net operating income growth.
- UDR's strong balance sheet, ample liquidity, and disciplined capital allocation enable opportunistic acquisitions and development as new supply wanes, allowing the company to capture external growth opportunities and underpin future earnings and NAV expansion.
UDR Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming UDR's revenue will grow by 3.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 7.4% today to 11.9% in 3 years time.
- Analysts expect earnings to reach $227.8 million (and earnings per share of $0.72) by about September 2028, up from $127.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $296.4 million in earnings, and the most bearish expecting $148.0 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 88.2x on those 2028 earnings, down from 101.6x today. This future PE is greater than the current PE for the US Residential REITs industry at 32.5x.
- Analysts expect the number of shares outstanding to grow by 0.42% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.35%, as per the Simply Wall St company report.
UDR Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Persistent elevated supply in Sunbelt and select urban markets (e.g., Austin, Orlando) is still pressuring rental growth and keeping year-to-date same-store revenue in these regions slightly negative, which may weigh on overall revenue and NOI growth if absorption fails to keep pace with completions over the long term.
- Ongoing or potential regulatory risks in core high-cost markets-such as rent control measures in California's Monterey Peninsula and possible similar moves elsewhere-could cap renewal rent growth and compress margins, impacting long-term revenue and net operating income.
- Slower growth or lack of distress-driven opportunities in acquisitions and development, alongside rising construction costs and limited yield spreads to buying stabilized properties, may impede portfolio expansion and long-term earnings growth if capital can't be efficiently deployed.
- Technology and operational cost inflation (e.g., recurring Wi-Fi, CRM, cybersecurity investments) and episodic casualty/legal costs could structurally raise operating expenses relative to revenue, limiting margin expansion and pressuring long-term free cash flow.
- Heavy concentration in major coastal (West/East Coast) and urban gateway markets leaves UDR exposed to demographic and remote work trends that may favor suburban or exurban living, potentially reducing long-term demand and occupancy, thereby putting downward pressure on NOI and cash flow growth.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $44.119 for UDR based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $49.0, and the most bearish reporting a price target of just $37.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.9 billion, earnings will come to $227.8 million, and it would be trading on a PE ratio of 88.2x, assuming you use a discount rate of 7.3%.
- Given the current share price of $38.98, the analyst price target of $44.12 is 11.6% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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