UPDATE: MLV & Co Downgrades Apartment Investment and Management Co. to Hold, Reiterates $34 PT as Valuation Discount is Almost Gone

In a report published Wednesday, MLV & Co analyst Ryan Meliker downgraded the rating on Apartment Investment and Management Co. AIV from Buy to Hold, but reiterated the $34.00 price target. In the report, MLV & Co noted, “We are downgrading AIV to HOLD on the view that the stock's discount to NAV and peers has almost entirely eroded since we initiated with a BUY rating 16 months ago. We believe the relative out-performance of AIV vs. peers (+13.8%) and vs. the RMZ (+12.3%) over that timeframe has been driven by management's execution on the capital recycling front, leading to materially lower leverage. We give management much credit for the erosion of AIV's prior valuation discount, but with leverage levels currently in-line with the peer group average and asset sales that will limit common dividend growth, we are not confident further deleveraging will lead to a valuation premium. Given that view, we no longer expect AIV to materially out-perform peers or the RMZ, particularly following the recent stock performance (up 16.4% YTD). However, we do believe continued portfolio quality improvements will lead the stock higher, ultimately to NAV. As such, while we are downgrading to HOLD, we are maintaining our year-end 2014 $34 price target, highlighting continued upside to the shares.” Apartment Investment and Management Co. closed on Tuesday at $30.17.