On Monday, RBC Capital Markets adjusted its outlook on American Homes 4 Rent (NYSE:AMH) stock, increasing the price target to $42.00 from the previous $41.00 while keeping an Outperform rating.
The revision followed the company's second quarter earnings of 2024, which the firm found reassuring compared to the report from Invitation Homes (NYSE:NYSE:INVH).
American Homes 4 Rent's earnings report was a positive surprise, especially in light of the earnings from a close peer. The company not only reported better than anticipated leasing spreads for June and July but also raised its guidance, which RBC Capital still considers conservative. This indicates a stronger performance than the market had forecasted for the single-family rental company.
The analyst highlighted that development continues to be the most efficient use of the company's capital. Expected yields are projected to see a slight increase in 2025. This focus on development is seen as a key driver of the company's future growth and performance.
Management at American Homes 4 Rent pointed out that despite a high supply of build-to-rent (BTR) housing, the competition remains limited when compared to what the company offers. This suggests a competitive advantage for American Homes 4 Rent in the BTR market segment.
In conclusion, RBC Capital has adjusted its estimates for American Homes 4 Rent upward by 1-2%. The positive outlook reflects the company's solid second quarter performance and strategic positioning in the market, as well as the potential for continued growth in the coming years.
In other recent news, American Homes 4 Rent (AMH) showcased solid growth in its second quarter, reporting an 8.5% year-over-year increase in core Funds From Operations (FFO) per share. The company also raised its full-year core FFO per share outlook to $1.76, indicating a projected 6% growth.
AMH's strategic financial management 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 demand for single-family rentals remains high due to a housing shortage and elevated home prices. AMH is leveraging this demand 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.
AMH's occupancy rate stands at 96%, with a strategy to sell homes gradually through the MLS. The company maintains a diversified presence across 35 markets, focusing on development market growth. These are among the recent developments that highlight the company's strategic focus on growth and maximizing shareholder value.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.