Deutsche Bank upgraded Invitation Homes to Buy from Hold with a price target of $41, up from $35. Despite a strong fundamental backdrop, the single family for rent sector has meaningfully underperformed the multifamily/apartment sector as well as homebuilders, the analyst tells investors in a research note. The firm believes single family for rent companies could generate better earnings growth in 2024 and 2025, especially given that there is no supply overhang which is an issue on the multifamily side. It also believes regulatory risk is dissipating given the recent failure in California to implement anti-SFR legislation. The recent withdrawal of President Biden from the 2024 presidential race should also quell concerns around a national rent control bill which has weighed on the sector in recent weeks, adds Deutsche Bank. It believes the improvise external growth profile along with resolution of the Qui Tam litigation are positive catalysts for Invitation Homes.
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