American Homes 4 Rent upgraded, as sector supply drops 60%

BMO Capital Markets upgraded American Homes 4 Rent (AMH) to Outperform from Market Perform. The firm maintained a $39.00 price target. Analysts cited attractive valuation and improving fundamentals for the rating change.

Build-for-rent supply has decreased approximately 60% from its peak levels. BMO highlighted the company’s geographic diversification and limited exposure to the oversupplied Sunbelt region. American Homes 4 Rent maintains stronger margins than its industry competitors.

Bipartisan support for the 21st Century Road to Housing Act reduces regulatory risks for the industry. Healthy tenant renewals continue to support the company's positive outlook. American Homes 4 Rent is also funding accretive buybacks through property dispositions.