Instinet Downgrades Colony Starwood Homes (SFR) to Neutral; Limited Scope for Improvement

November 22, 2016 7:55 AM EST
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Price: $29.41 --0%

Rating Summary:
    3 Buy, 2 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 18 | Down: 13 | New: 9
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Instinet downgraded Colony Starwood Homes (NYSE: SFR) from Buy to Neutral with a price target of $33.00 (from $38.00), citing a limited scope for further operational improvement.

Analyst Brock Vandervliet commented, "We are downgrading SFR from Buy to Neutral and reducing our TP from $38 to $33. SFR’s stock performance since the merger (SWAY/CAH) in January has been impressive, rising 34%. Our downgrade is based on a combination of incrementally greater concern regarding the potential for higher interest rates, historically a headwind for all REIT stocks, combined with a limited ability to materially improve financial performance. In addition, although we believe there is great long-term consolidation potential in this sector, at this valuation we do not expect large-scale share issuance that would allow SFR a currency for large-scale acquisitions. Following the Q3 print and several discussions with management, we trim our 2017 Core FFO estimate from $1.90 to $1.89 and reduce our target multiple from 20x to 17.5x, with a revised TP of $33. In the BTR space, we favor Altisource Residential, RESI (Buy) which has a substantially more discounted valuation and, in our view, more operational efficiency gains ahead of it."

For an analyst ratings summary and ratings history on Colony Starwood Homes click here. For more ratings news on Colony Starwood Homes click here.

Shares of Colony Starwood Homes closed at $30.16 yesterday.

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