On Thursday, Invitation Homes Inc . (NYSE:INVH) experienced a downgrade in its stock rating by analysts at Jefferies, moving from a Buy to a Hold rating. Alongside this change, the firm also adjusted the price target for Invitation Homes to $33.00, a decrease from the previous target of $39.00.
The downgrade by Jefferies was influenced by the increase in competition from the build-to-rent (BTR) sector, which has led to a decline in new lease rate growth for Invitation Homes. In October, the company recorded a negative growth rate of -1.3%. While the management of Invitation Homes has indicated that a slowdown in BTR deliveries expected in 2025 could improve the situation, Jefferies remains skeptical about the company's ability to quickly overcome the concessions made.
Interest rates are also a factor in the revised outlook for Invitation Homes. With current interest rates being high, the potential for increased demand from renters offers only a nominal benefit to the company. However, Jefferies points out that if interest rates were to decrease, it could lead to higher turnover as renters may prefer to purchase homes instead of renting.
The analysis by Jefferies reflects concerns over the balance of risks and rewards for Invitation Homes in the current economic climate. The firm's perspective suggests that the potential challenges posed by both the BTR competition and fluctuating interest rates could impact the company's performance in the market.
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