Jefferies initiates Armada Hoffler Properties stock with buy rating

Published 27/06/2025, 08:32
Jefferies initiates Armada Hoffler Properties stock with buy rating

Investing.com - Jefferies initiated coverage on Armada Hoffler Properties (NYSE:AHH) with a buy rating and set an $8.00 price target on Friday, representing potential upside from the current price of $6.96. According to InvestingPro data, analyst targets for AHH range from $7.50 to $10.50.

The real estate investment trust has underperformed the market this year, with shares down 32% year-to-date following a dividend cut in the first quarter that surprised investors, according to Jefferies. Despite the cut, InvestingPro data shows the company has maintained dividend payments for 13 consecutive years, demonstrating long-term commitment to shareholder returns.

Despite the negative market reaction, Jefferies believes the selloff is overdone and overlooks the company’s solid fundamentals and well-covered dividend, which still offers an attractive 8% yield.

The investment firm expects near-term earnings to exceed the market’s low expectations for Armada Hoffler, which faced challenges including tough construction comparisons, a planned third-quarter 2025 equity raise, and higher interest expenses.

Jefferies anticipates the stock will eventually re-rate more in line with its historical averages as these concerns subside and the company’s underlying performance becomes more apparent to investors.

In other recent news, Armada Hoffler Properties reported its financial results for the first quarter of 2025, revealing a miss on both earnings per share (EPS) and revenue compared to analysts’ forecasts. The company posted an EPS of -$0.07, falling short of the expected $0.01, and revenue came in at $63.8 million, below the anticipated $66.03 million. Despite this, Armada Hoffler reaffirmed its full-year 2025 normalized funds from operations (FFO) guidance of $1.00 to $1.10 per diluted share. Additionally, the company declared a regular quarterly cash dividend of $0.14 per common share and a cash dividend of $0.421875 per share on its 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock. In another development, Armada Hoffler announced the retirement of Eva Hardy from its Board of Directors, aligning with the company’s mandatory retirement age policy. Furthermore, the company disclosed that KPMG LLP will replace Ernst & Young LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2026. These changes and financial updates represent recent developments for Armada Hoffler Properties.

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