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On Thursday, Mizuho (NYSE:MFG) Securities enhanced its outlook on Invitation Homes (NYSE:INVH), elevating the company’s stock rating from Neutral to Outperform and maintaining the price target at $36.00. The adjustment reflects a positive stance on the company’s future earnings growth and relative valuation within the single-family rental (SFR) sector. With a market capitalization of $20.35 billion and a P/E ratio of 44.7, InvestingPro analysis indicates the stock is currently trading at a premium to its Fair Value.
In his statement, the Mizuho analyst cited the recent completion of fourth-quarter 2024 earnings and the initial guidance for fiscal year 2025 as the basis for the updated perspective. The company has demonstrated solid performance with a 7.29% revenue growth over the last twelve months and maintains a healthy dividend yield of 3.5%. The firm also introduced its first earnings estimates for fiscal year 2026, which contributed to the decision to upgrade Invitation Homes’ stock.
The analyst’s optimism is based on an anticipated "inflection" point—characterized by a decrease in shadow supply and an increase in blended rents, same-store revenue, and earnings growth expected in 2026. This inflection, combined with the company’s relative valuation, underpins the upgraded rating and higher price target. InvestingPro data reveals the company maintains strong financial health with a GOOD overall score and liquid assets exceeding short-term obligations.
Invitation Homes is viewed as particularly resilient amid market volatility and macroeconomic uncertainty, according to the Mizuho analyst. The SFR sector, where Invitation Homes operates, is considered a "net winner" due to its defensive tenancy characteristics. These include higher retention rates, a larger proportion of dual household incomes and families, and the ongoing affordability challenges in the single-family home market. Subscribers to InvestingPro can access additional insights, including 5+ more ProTips and a comprehensive Pro Research Report that provides deep-dive analysis of the company’s performance and outlook.
The comprehensive analysis by Mizuho includes updated estimates and price targets for the sector, as detailed in Exhibit 3 of their report. The attached models provide a deeper insight into the firm’s projections and the factors driving the positive outlook for Invitation Homes.
In other recent news, Invitation Homes reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.23, compared to the forecasted $0.18. The company’s revenue also exceeded projections, reaching $659 million against an expected $650.49 million. This performance reflects a revenue growth of 5.6% year-over-year, with the company’s Core Funds From Operations (FFO) per share rising by 5.9% and Adjusted Funds From Operations (AFFO) per share climbing by 8.9%. Keefe, Bruyette & Woods analyst Jade Rahmani recently increased the price target for Invitation Homes to $36 from $35, maintaining a Market Perform rating on the company’s shares. This adjustment followed the company’s reported same-store net operating income (NOI) increase of 4.7% year-over-year, slightly below the firm’s projection of 4.8%. Despite a deceleration in rent growth and occupancy predictions, Invitation Homes showed positive trends in early 2025, with blended lease growth increasing to 3.6% from the previous quarter’s 2.3%. The company anticipates challenges in supply dynamics for 2025 but remains optimistic about maintaining high occupancy rates and expects to make $600 million in wholly owned acquisitions.
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