American Homes 4 Rent (NYSE: NYSE:AMH) received a stock rating upgrade from Wells Fargo, shifting from Equal Weight to Overweight. The firm also raised the price target for the company's shares to $42.00, up from the previous target of $36.00.
Wells Fargo's decision to upgrade the real estate investment trust comes amid a positive outlook on single-family rental (SFR) demand. The firm acknowledges the potential for American Homes 4 Rent to broaden its portfolio through strategic acquisitions and development. This expansion is expected to contribute to the company's earnings growth and operational synergies.
The analyst noted the company's balanced portfolio as a strength, along with the opportunities presented by its internal development pipeline. These factors contribute to the firm's favorable view of American Homes 4 Rent's future performance in the market.
The new price target of $42.00 represents a notable increase from the previous target, indicating Wells Fargo's confidence in the company's ability to grow and capitalize on market opportunities.
In other recent news, American Homes 4 Rent reported an 8.5% year-over-year increase in core Funds From Operations (FFO) per share for the second quarter, raising its full-year core FFO per share outlook to $1.76, indicating a projected 6% growth.
The company is in discussions to acquire a portfolio of 1,700 homes from Man Group, a move that Scotiabank believes could boost the company's FFOPS by approximately 1% by 2025. Both Scotiabank and RBC Capital Markets have reaffirmed their positive outlooks on the company, with Scotiabank maintaining a Sector Outperform rating and RBC Capital Markets raising its price target to $42.00.
American Homes 4 Rent's strategic financial actions included the issuance of a 10-year unsecured bond and the closure of a new $1.25 billion revolving credit facility, contributing to a stronger balance sheet.
The company is leveraging the high demand for single-family rentals by enhancing the resident experience and expanding its housing stock through its development program. Despite some supply pressure from new built-to-rent developments in the Phoenix market, the company expects continued strong demand for single-family rentals, backed by housing undersupply.
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