Breaking News

Zelman removed Lennar (LEN) and Meritage Homes (MTH) from its Top Idea Basket and added TRI Pointe (TPH). The firm also downgraded Meritage Homes to Hold from Buy.

JPMorgan analyst Michael Rehaut raised the firm's price target on Lennar to $94 from $87 and keeps a Neutral rating on the shares. Despite the sector being up 38% year-to-date led by an "impressive" rebound in demand following the early days of the pandemic, homebuilders have a "solid amount of additional upside potential left in the tank over the next 15 months," Rehaut tells investors in a research note. Single-family housing starts are currently only approaching their long-term average after an "unprecedented" 13 years of being below 1.0M, the analyst points out. He expect "solid growth" over the next two years to be driven by low interest rates, a recovering job market, improving consumer confidence, tight supply and solid household formation.

Citi analyst Anthony Pettinari raised the firm's price target on Lennar to $90 from $77 and reiterates a Buy rating on the shares. Lennar shares fell 3.9% despite a "strong" fiscal Q3 beat as record lumber costs and tight labor have created an incentive for builders to slow sales pace, "dulling the edges of an otherwise sharp V-shaped housing recovery," Pettinari tells investors in a research note. However, the analyst thinks the company's focus on returns over volume is prudent and that the stock reaction is overdone. He still believes housing is well positioned to outperform the broader economy in the recovery.