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AvalonBay Communities Inc.

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Shares of AvalonBay have underperformed its industry over the past three months. Moreover, the stock has seen the Zacks Consensus Estimate for first-quarter 2018 funds from operations (FFO) per share being revised downward in two months’ time. In the March-issued operating update for first quarter, the company stated that it expects total rental revenues for established communities to be up 2.3–2.4% year over year. Notably, new apartment deliveries are anticipated to remain elevated in the company’s markets in 2018. Particularly, supply continues to be most noticeable in the urban submarkets. Hence, growth in its stabilized portfolio is likely to remain moderate in the upcoming period. Furthermore, high concession activity amid higher supply remains a concern.

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