Lagging Real Estate Stocks Have Dropped Too Far, Analysts Say

Wall Street analysts see a double-digit upside potential for the S&P 500’s biggest losers this year: real estate stocks.

All that may be needed to turn the group’s fortunes around, say investors and analysts, is firmer conviction that long-term borrowing costs have plateaued and will head lower. That notion got a boost on Friday after a weaker-than-forecast report on the US labor market caused Treasury yields to tumble.

Analysts covering the industry’s stocks expect a 16% rally in the group in the next 12 months, based on Thursday’s closing levels, according to data compiled by Bloomberg. And for the sector’s most troubled names — real estate investment trusts — analysts see 15% upside potential during that time.

real estate slumps