Analysts up and down Wall Street adjusted their recommendations in the first quarter as they reflected on 2006 performance and prognosticated on how current economic trends will affect the apartment industry. Job and apartment fundamentals are moderating in several rental markets, and home-buying is still affordable enough for some renters fed up with huge rent hikes.

These factors led some analysts to downgrade a few multifamily stocks. Chief among them: Archstone-Smith (NYSE: ASN). Four firms—Goldman Sachs, JP Morgan, KeyBanc Capital Markets, and UBS—dialed back their recommendations for the company to hold or neutral. (Hanley Wood, LLC, which publishes MFE, is owned by affiliates of JPMorgan Partners.)

“More often than not, Archstone is on the forefront of the rent spectrum,” says Alexander Goldfarb, a multifamily analyst with UBS, which downgraded ASN stock in February. “We think they'll have a harder time getting the same type of increases they have been going forward.” That's because residents are becoming more sensitive to rent increases and may walk—to a lesser-priced apartment or into a for-sale home—they feel landlords have hiked too high, he says. “We think the rent growth they have gotten over the past couple years, they won't be able to get in the next year from marginal rentals,” Goldfarb notes.

For his part, Archstone chairman and CEO Scot Sellers isn't too concerned with analysts' quarterly views. “We don't focus our attention on short- term changes in ratings,” he says. “We do what we believe are the right things to create significant long-term value for our shareholders, and our track record in this regard is very strong.”