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On Tuesday, JMP Securities analyst Aaron Hecht upgraded American Homes 4 Rent (NYSE:AMH) stock rating from Market Perform to Market Outperform, while setting a new price target of $41.00. Currently trading at $34.78 and near its 52-week low, the $14.65 billion market cap company maintains a "GOOD" financial health score according to InvestingPro analysis. The upgrade was based on the company’s reported core Funds From Operations (FFO) of $0.45 per share, which met both JMP’s and the consensus estimates.
The results for American Homes 4 Rent showed an increase in Net Operating Income (NOI), which was balanced by higher General & Administrative (G&A) and property management expenses. Additionally, the company provided its initial core FFO guidance for the year 2025 at a midpoint of $1.83, aligning with JMP’s estimate and slightly below the consensus.
Hecht noted that despite the single-family rental sector experiencing negative impacts from supply over the past year, leading to weaker lease rate growth, American Homes 4 Rent’s performance remained steady. In the fourth quarter of 2024, new leases and renewals grew at 0.2% and 4.9% respectively, compared to 4.5% and 6.2% in the same quarter of the previous year.
The analyst also observed that the development cycle for single-family rentals is similar to that of Sunbelt apartments, albeit less extreme. This similarity is expected to benefit American Homes 4 Rent as the company is likely to see a decrease in supply from several sources, including apartment deliveries, commercial single-family rental developments, and reduced homebuilding activity due to affordability challenges.
Hecht encouraged investors to take advantage of this potential inflection point during the first half of 2025 by initiating or adding to their positions in American Homes 4 Rent. The analyst’s outlook suggests a positive trajectory for the company as it navigates the current real estate market conditions.
In other recent news, American Homes 4 Rent (AMH) reported its fourth-quarter 2024 earnings, which exceeded analysts’ expectations with an earnings per share (EPS) of $0.33, compared to the forecasted $0.16. Despite this positive earnings surprise, the company’s revenue of $436.6 million fell short of the anticipated $441.81 million. The company achieved a 6.6% growth in core funds from operations (FFO) per share, contributing to a full-year net income of $398.5 million. Looking ahead, AMH has provided guidance for 2025, expecting core FFO per share to range between $1.80 and $1.86. In terms of development, the company plans to deliver approximately 2,300 homes in 2025, maintaining its focus on growth. Analysts have not provided any recent upgrades or downgrades for AMH, but the company’s strategic market positioning and focus on high-quality rental homes remain a point of interest.
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