11:47 AM EDT, 09/24/2024 (MT Newswires) -- Invitation Homes ( INVH ) is facing "bumps" in the road into next year as its lease rate growth is underperforming against its peer and supply may remain an issue in 2025, BofA Securities said in a Tuesday note.

Invitation Homes ( INVH ) noted that it is facing supply challenges in Phoenix and Dallas markets, as well as in Tampa and Orlando in Florida, while the management anticipates the pressure to lessen by next year, BofA analyst Joshua Dennerlein said.

BofA also raised a concern about Invitation Homes ( INVH ) potentially overpromising its H2 rate growth. The company said during its Q2 earnings call that "as you look forward into September, and specifically, October, we get back over 7% in our ask." The investment firm's talks with the management indicate an average "take" rate 200 basis points lower than the "ask" rate, suggesting a renewal rate growth of 4% to 5%, according to the note.

"Given the softness in new lease rate growth and normal seasonality trends, the risk is that the spread between ask and take rate is higher than normal," Dennerlein said.

BofA downgraded Invitation Homes ( INVH ) to neutral from buy and cut its price target to $37 from $39.

Shares of the company were down 2.3% in recent Tuesday trading.

Price: 35.66, Change: -0.84, Percent Change: -2.30