Homebuilder stock DR Horton has 26% upside: Goldman Sachs
- Goldman Sachs upgraded DR Horton Inc to "buy" on Monday.
- Analyst Susan Maklari explained why in a research note today.
- DR Horton stock has lost about 20% over the past three months.
DR Horton Inc (NYSE: DHI) has lost about 20% over the past three months but a Goldman Sachs analyst is convinced that the story moving forward will be a different one.
DR Horton stock should be worth $131
Copy link to sectionSusan Maklari upgraded the homebuilder this morning to “buy” and said its shares could climb to $131 which represents a near 26% upside from here.
The analyst expects tight inventory and higher mortgage rates to bode well for “quick move-in homes” and by extension – for the DR Horton stock.
The construction giant is expected to report its quarterly earnings in the first week of November. Consensus is for it to earn $3.97 a share versus $4.67 per share a year ago.
Despite the recent sell-off, “DHI” is still up roughly 15% versus the start of 2023.
Susan Maklari’s expectations for 2024
Copy link to sectionThe widely followed 30-year fixed mortgage rate currently sits near 8.0% – levels not seen in more than twenty years.
Still, Susan Maklari is confident that the New York listed firm can manage up to a 6.0% increase in closings next year on the back of “focus on entry level while maintaining a steady starts pace”.
She expects the management to guide for a 5.0% annualised growth in home sale revenues for fiscal 2024 – about 200 basis points above the peer average.
Note that legendary investor Warren Buffett invested more than $700 million in DR Horton stock this year in the second quarter. “DHI” currently pays a dividend yield of about 1.0%
