Mizuho Securities Upgrades Apartment Investment Management (AIV) to Buy

October 31, 2016 7:36 AM EDT
Get Alerts AIV Hot Sheet
Price: $44.18 --0%

Rating Summary:
    10 Buy, 14 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 11 | Down: 8 | New: 3
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Mizuho Securities upgraded Apartment Investment Management (NYSE: AIV) from Neutral to Buy with a price target of $49.00 (from $48.00).

Analyst Richard Anderson commented, "In our view, AIV demonstrated an incremental level of confidence for 2017 versus most of its peers, including a reiteration of its previous view that same store NOI growth could be in the 4.75% range (equivalent to what it estimated a few quarters back). And with half of its capital dedicated to non-Class A price points, AIV appears somewhat insulated from the wave of supply pressure impacting the sector. The combination of renewal rents in the 4.5% range (i.e., above average), turnover running below 50%, and 2017 expense growth expected to remain manageably below 3%, should provide a measure of internal growth support. Hence, we see AIV as an interesting picture on a questionable canvas. The stock is up 7% year-to-date, so that did give us some initial pause in making this change, but the PT math we applied easily got us over that hump."

He added, "In some ways, AIV is a reincarnation of the Home Properties business model -- owning lower price-point assets and upgrading them through a dedicated redevelopment program. With the company’s ability to turn 1,500 vacant units to start the year, into 150 to end the year (a 90% drop), that should also resonate well with the 2017 outlook. And on top of all of that, a continued commitment to deleveraging looks likely to produce lower interest expense next year through debt reduction and refinancing activities. So, despite a long history that has had its ups and downs, we think AIV has the building blocks right now to achieve good growth at a discount during 2017."

For an analyst ratings summary and ratings history on Apartment Investment Management click here. For more ratings news on Apartment Investment Management click here.

Shares of Apartment Investment Management closed at $42.85 yesterday.

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