Why Front Yard Residential Zoomed Almost 16% Higher Today

What happened

Single-family residential real estate investment trust (REIT) Residential front yard (NYSE: RESI) received a major boost thanks to the return of Swiss credit analyst Douglas Harter. The analyst restored his hedging on the stock with an outperformance recommendation (buy) and a target price of $ 11 per share, 57% above the current level.

Image source: Getty Images.

So what

Credit Suisse scrapped coverage of Front Yard Residential earlier this year, after REIT agreed to be acquired, in a deal valued at $ 2.3 billion, by its private counterpart Amherst Residential.

Earlier this month, however, that deal was canceled. In a press release about it, Amherst blamed the SARS-CoV-2 coronavirus, saying it “has made the integration of organizations too complex and operationally uncertain.” He settled by buying $ 4.4 million of shares in Front Yard Residential and giving his partner a two-year, $ 20 million unsecured loan.

Subsequently, Front Yard Residential released figures for the first quarter of fiscal 2020 that set several new quarterly records, despite the adverse effects of the coronavirus outbreak. Core funds from operations nearly doubled from the previous quarter, while the stabilized rental percentage (read: occupancy) hit a new high of 97%.

Now what

Based on these first quarter numbers, Front Yard Residential is doing very well on its own. Investors will be keeping an eye on the company to see if it can sustain this growth amid the pandemic.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Roberto Frank

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