On Monday, Keefe, Bruyette & Woods adjusted their stock price target for American Homes 4 Rent (NYSE:AMH), increasing it to $39.00 from the previous $38.00. The firm maintained its Market Perform rating on the stock. This adjustment follows the company's first-quarter results, which surpassed expectations due to improved property revenue and reduced property operating expenses.
The company's same-home core results remained stable, and management has opted to keep their guidance unchanged. Year-over-year, same-store net operating income (NOI) rose by 4.9%, including a revenue increase of 5.3% and expenses up by 5.9%.
After capital expenditures, the NOI growth was 5.1%, with a NOI margin (after capex) standing at 61.8%. Average occupancy was reported at 96.2%, which is a decrease of 100 basis points year-over-year but a 10 basis points increase quarter-over-quarter. Bad debt expense saw a quarter-over-quarter decrease of 22 basis points, settling at 1.07%.
The analyst's commentary highlighted that American Homes 4 Rent's valuation is the basis for the Market Perform rating. The stock is currently trading at approximately 24 to 25 times the estimated adjusted funds from operations (AFFO) for the years 2024-2025. In comparison, Invitation Homes (NYSE:INVH) trades at a multiple of 21 to 22 times its estimated AFFO for the same period.
The report comes after American Homes 4 Rent reported first-quarter earnings that showcased the company's ability to generate stable income from its property portfolio. The unchanged guidance from management suggests a steady outlook for the company's performance in the near term.
Investors and market watchers will likely keep an eye on American Homes 4 Rent's stock performance following the revised price target and the analyst's remarks on the company's valuation relative to its peers in the industry.
InvestingPro Insights
As American Homes 4 Rent (NYSE:AMH) continues to draw attention following its first-quarter results, the latest data from InvestingPro provides additional insights. The company's market cap stands at a substantial $15.0 billion, and its P/E ratio is 36.68, which may reflect investor confidence in its future growth despite the ratio being above the industry average. Notably, American Homes 4 Rent has demonstrated a commitment to shareholder returns, having increased its dividend for three consecutive years, a sign of financial stability and management confidence.
InvestingPro Tips highlight that the stock trades near its 52-week high and with low price volatility, factors that might appeal to investors looking for stable equity in the real estate sector. Additionally, the company has been profitable over the last twelve months, which aligns with the positive earnings report. For investors seeking further analysis and tips, InvestingPro offers additional insights on American Homes 4 Rent, with more tips available at https://www.investing.com/pro/AMH. To access these valuable resources, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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