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On Tuesday, Keefe, Bruyette & Woods raised the price target for American Homes 4 Rent (NYSE:AMH) to $40 from the previous $38, while keeping a Market Perform rating on the stock. The adjustment followed the company’s first-quarter performance and observed rent growth in April.
American Homes 4 Rent’s first-quarter results exceeded expectations with Core Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) showing slight improvements. The company’s same-home Net Operating Income (NOI) after capital expenditures rose by 3.5% year-over-year. Average occupancy rates saw an increase of 50 basis points quarter-over-quarter, reaching 95.9%, despite a minor year-over-year dip of 20 basis points. InvestingPro analysis shows the company maintains strong financial health with a "GOOD" overall rating, supported by revenue growth of 6.97% in the last twelve months.
The firm also reported an acceleration in average blended rent growth to 3.6% year-over-year, up from 3.4% in the previous quarter. This increase included a 1.4% rise in new leases, improving from a 0.3% increase in the fourth quarter, and a 4.5% upswing in renewals, although slightly down from 5.0% in the previous quarter.
Further improvements were noted in April, with American Homes 4 Rent reporting a blended lease growth of 4.3%, new lease growth of 3.9%, renewal growth of 4.4%, and an occupancy rate of 96.3%. Despite these positive indicators, Keefe, Bruyette & Woods maintained their Market Perform rating, citing the stock’s valuation, which is currently trading at 23-24 times AFFO and an economic capitalization rate of 4.7-4.9% based on their 2025-26 estimates.
The firm’s decision to adjust the target price comes after a careful analysis of the company’s first-quarter achievements and the stronger growth experienced in April, which led to a modest increase in their forward estimates by 1-2%. InvestingPro data reveals that AMH has maintained dividend payments for 13 consecutive years, currently offering a 3.09% yield. For deeper insights into AMH’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of key metrics and growth drivers.
In other recent news, American Homes 4 Rent (AMH) reported its first-quarter 2025 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $0.30, significantly higher than the forecasted $0.16. The company’s revenue also surpassed predictions, reaching $459.28 million compared to the anticipated $456.37 million. AMH maintained its guidance for 2025, expecting full-year occupancy around 96% and average rent growth in the high 3% range. Analysts from S&P Global revised AMH’s credit rating to a positive outlook, highlighting the company’s commitment to prudent balance sheet management. The company also emphasized its strategic focus on high-quality markets and geographic diversification, which have contributed to its strong market position. AMH’s lease management initiatives and regional market performance were key topics during the earnings call, with executives noting strong demand and effective lease management strategies. Despite potential tariff impacts on development costs, the company remains confident in its growth prospects. These developments reflect AMH’s ongoing operational efficiency and the favorable market conditions it operates within.
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