Goldman Sachs downgrades American Homes 4 Rent stock on rental market concerns

Investing.com - Goldman Sachs downgraded American Homes 4 Rent (NYSE:AMH) from Buy to Neutral on Wednesday, setting a price target of $37.00. The stock, currently trading at $33.36, maintains strong fundamentals with a 3.6% dividend yield and has raised dividends for 4 consecutive years, according to InvestingPro data.

The investment bank cited concerns about an influx of single-family rental (SFR) listings in AMH’s markets, creating what it describes as "shadow supply" as would-be home sellers become "accidental landlords" and homebuilders convert for-sale products into rental properties.

Goldman Sachs noted that rising SFR listings appear to be outpacing demand, resulting in declining market rents in areas where American Homes 4 Rent operates, according to data from Zillow market rent trends.

The firm adjusted its Core FFO estimates for American Homes 4 Rent downward by 0.1% for 2025 and 1.9% for 2026, positioning its forecast 0.7% and 2.0% below consensus estimates, respectively.

Goldman Sachs specifically pointed to consensus expectations as underestimating seasonal deceleration in new leases during the second half of 2025 and overestimating renewal growth acceleration in the first half of 2026.

In other recent news, American Homes 4 Rent reported its second-quarter 2025 earnings, significantly surpassing analyst expectations. The company achieved an earnings per share (EPS) of $0.28, well above the forecasted $0.17, alongside revenue of $457.5 million, exceeding the anticipated $450.51 million. This positive performance led Citizens JMP to reiterate its Market Outperform rating with a $41.00 price target, highlighting the company’s strong core funds from operations (FFO) and net operating income (NOI). Mizuho, however, adjusted its price target for American Homes 4 Rent to $36.00 from $38.00, citing concerns over property tax outlook, though it maintained an Outperform rating.

Meanwhile, Camden Property Trust faced a downgrade from Goldman Sachs, which shifted its rating from Neutral to Sell. The investment bank lowered Camden’s price target to $106.00 from $118.00, expressing concerns about weak rent growth prospects in the coming years. These developments reflect varied analyst perspectives on the real estate sector, with American Homes 4 Rent receiving favorable reviews despite some cautionary notes, while Camden Property Trust faces challenges ahead.

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