Home builder stocks shouldn't bounce much after earnings as rate outlook weighs, analyst says
J.P. Morgan analyst Michael Rehaut cut his price targets on a host of home builders' stocks, saying investors are likely to remain concerned about the sustainability of current demand given the continued rise in interest rates. The iShares U.S. Home Construction ETF rose 2.0% in midday trading Wednesday, but has tumbled 29.4% since closing at a record $83.04 on Dec. 12, 2020. In comparison, the S&P 500 has lost 6.1% over the same time. Meanwhile, several home builders are expected to report quarterly results over the next couple weeks. "Regarding our sector view into earnings, we do not expect any material or sustained rebound in the stocks this earnings season," Rehaut wrote in a note to clients. Among the larger capitalization stocks in the sector, Rehaut cut his stock price targets for D.R. Horton Inc. to $82.50 from $100.00, for Lennar Corp. to $89 from $108, for NVR Inc. to $4,770 from $5,300, for PulteGroup Inc. to $48 from $57 and for Toll Brothers Inc. to $51 from $58.
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