Jefferies Initiates Coverage on Armada Hoffler Properties with a Buy Rating

Jefferies initiated coverage on Armada Hoffler Properties (AHH) with a buy rating and a price target of $8.00. The analyst expects the stock to perform well, with potential for value growth. Based on 5 analyst estimates, the average target price is $8.50, implying a 22.13% upside from the current price of $6.96. The average brokerage recommendation is 2.0, indicating an "Outperform" status. GuruFocus estimates a GF Value of $13.99 in one year, suggesting a 101.01% upside from the current price.

Jefferies has initiated coverage on Armada Hoffler Properties (AHH) with a buy rating and a price target of $8.00. The analyst expects the stock to perform well, with potential for value growth. Based on 5 analyst estimates, the average target price is $8.50, implying a 22.13% upside from the current price of $6.96. The average brokerage recommendation is 2.0, indicating an "Outperform" status. GuruFocus estimates a GF Value of $13.99 in one year, suggesting a 101.01% upside from the current price.

Armada Hoffler Properties, a real estate investment trust (REIT), has underperformed the market this year, with shares down 32% year-to-date. This underperformance was largely due to a dividend cut in the first quarter and tough construction comparisons [1]. Despite these challenges, Jefferies believes the selloff is overdone and overlooks the company’s solid fundamentals and well-covered dividend, which still offers an attractive 8% yield.

Jefferies expects near-term earnings to exceed the market’s low expectations for Armada Hoffler. The company faced challenges including tough construction comparisons, a planned third-quarter 2025 equity raise, and higher interest expenses. However, the analyst anticipates the stock will eventually re-rate more in line with its historical averages as these concerns subside and the company’s underlying performance becomes more apparent to investors.

In other recent news, Armada Hoffler Properties reported its financial results for the first quarter of 2025, revealing a miss on both earnings per share (EPS) and revenue compared to analysts’ forecasts. The company posted an EPS of -$0.07, falling short of the expected $0.01, and revenue came in at $63.8 million, below the anticipated $66.03 million. Despite this, Armada Hoffler reaffirmed its full-year 2025 normalized funds from operations (FFO) guidance of $1.00 to $1.10 per diluted share. Additionally, the company declared a regular quarterly cash dividend of $0.14 per common share and a cash dividend of $0.421875 per share on its 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock [1].

The company also announced the retirement of Eva Hardy from its Board of Directors, aligning with the company’s mandatory retirement age policy. Furthermore, the company disclosed that KPMG LLP will replace Ernst & Young LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2026. These changes and financial updates represent recent developments for Armada Hoffler Properties [1].

Jefferies notes that the company’s geographic focus aligns with demographic growth trends, particularly in the Sun Belt. The brokerage expects a 5% compound annual growth in funds from operations (FFO) per share through 2026, driven by same-store net operating income (NOI) gains, development completions, and falling interest costs. The stock currently offers a 6.1% dividend yield [2].

References:
[1] https://www.investing.com/news/analyst-ratings/jefferies-initiates-armada-hoffler-properties-stock-with-buy-rating-93CH-4114056
[2] https://uk.investing.com/news/stock-market-news/jefferies-initiates-armada-hoffler-at-buy-targets-31-upside-on-nav-discount-4150041