On Friday, Evercore ISI maintained its In Line rating and $38.00 stock price target for American Homes 4 Rent (NYSE:AMH), following the company's first-quarter results. The company's Core Funds from Operations (FFO) of $0.43 per share met both Evercore ISI's and the consensus estimates.
American Homes 4 Rent reported a Core Net Operating Income (NOI) growth of 4.9%, which was above expectations, as lower-than-anticipated revenue growth was balanced by decreased expense growth.
The company's management had initially provided a conservative guide, especially regarding revenue, not expecting any reduction in bad debt. Still, American Homes 4 Rent, like its peers, benefited from a decline in bad debt of approximately 40 basis points.
The firm noted that it would look for additional insights on this trend during the company's earnings call and how management anticipates it will evolve throughout the year.
For the quarter, same-store (SS) revenue, expenses, and NOI growth for American Homes 4 Rent were 5.3%, 5.6%, and 4.9% respectively. These figures were in line with Evercore ISI's estimates for NOI growth but showed slightly lower revenue and lower expense growth than anticipated.
The revenue was affected by weaker blended spreads on a trailing twelve months basis, but this was partially mitigated by slightly higher occupancy rates and improved bad debt trends.
The firm highlighted that same-store expense growth was below their estimate due to a decrease in property management expenses year-over-year, contrary to the expected increase of over 5%. Similarly, American Homes 4 Rent's Core FFO guidance for 2024 remained unchanged, with a range of $1.70 to $1.76, aligning with the consensus estimate of $1.74.
Evercore ISI will be paying close attention to the upcoming earnings call for any updates on the guidance and comments regarding capital deployment opportunities and trends in land values.
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