Shares of Mid-America Apartment Communities ( NYSE: MAA ), +2.8% , and American Homes 4 Rent ( NYSE: AMH ), +1% , perked up in Thursday morning trading after Goldman Sachs analyst Chandni Luthra upgraded the residential REITs to Buy from Neutral.
For MAA, Luthra explained that its "modest price point would benefit t in a tougher economic environment with potential for trade-down," according to a note. In addition, the company has relatively low leverage, "suggesting acquisition opportunities from distressed merchant builders."
Seeking Alpha contributor Leo Imasuen also viewed MAA as a Buy , citing its resilience against the rising interest rate environment, with 97% of its long-term debt fixed.
The upbeat coverage of AMH, meanwhile, comes amid the company's favorable positioning in single-family rentals against a backdrop of "strong demand for housing amidst a shortage crisis," the note read. The Buy rating diverges from the Quant system's Hold rating but agrees with the average Wall Street analysts' Buy rating.
On the flip side, the analyst downgraded AvalonBay ( NYSE: AVB ) stock to Neutral on development concerns, cut Invitation Homes ( NYSE: INVH ) to Neutral on higher bad debt and expenses, and lowered Tricon Residential ( NYSE: TCN ) to Neutral on higher leverage and a lower growth algorithm.
Take a look at the Quant's screener of the best rated residential REITs, with MAA taking the lead.
Previously, (Dec. 4) BofA picks industrial, self-storage, senior housing REITs in 2023 outlook .
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Mid-America Apartment Communities, American Homes 4 Rent raised to Buy at Goldman