INVH - Mizuho cuts Invitation Homes to Neutral as stock is fairly valued

2023-03-22 09:54:49 ET

Mizuho Securities downgraded Invitation Homes ( NYSE: INVH ) to Neutral from Buy as the stock is fairly valued, and prefers American Homes 4 Rent ( AMH ) and Tricon Residential ( TCN ).

"While we remain long-term fans of this well-established platform, we see incremental risk/headwinds that support our view  that the stock is fairly valued with a less-compelling risk/reward profile vs. direct peers AMH and TCN," said analyst Haendel St. Juste.

Mizuho believes American Homes ( AMH ) warrants a premium vs. Invitation ( INVH ) given comparable core growth potential, more sticky external growth (development) and less litigation risk. "In TCN, we see a more attractive valuation with better near-term earnings/core growth and broader sources of capital (JVs)."

Invitation ( INVH ) is projected to have the weakest same-store revenue growth among single-family rental REITs this year. "A still-stalled acquisition market has more repercussions for INVH than AMH and TCN, as more of INVH's growth profile comes via acquisitions."

Mizuho cut its price target on Invitation ( INVH ) to $32 from $33, implying 6% potential upside to its last close.

It rated both American Homes ( AMH ) and Tricon ( TCN ) Buy, with PTs of $33 (10.4% potential upside) and $9 (18.9% potential upside), respectively.

Wall Street analysts are largely bullish on Invitation ( INVH ), but SA Quant rates the stock Hold .

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