JPMorgan Downgrades Green Brick Partners (GRBK) to Neutral

JPMorgan analyst Michael Rehaut downgraded Green Brick Partners (NASDAQ: GRBK) from Overweight to Neutral with a price target of $28.00 (from $32.00).

The analyst comments "We downgrade GRBK to Neutral from Overweight on a relative basis, as we expect roughly in-line performance versus its peers over roughly the next 12 months. Overall, we view the stock’s relative valuation, trading roughly in-line with its higher-growth small cap peers on a P/E basis, as appropriately reflecting our outlook for modestly above average operating margins and below average ROE. Specifically, we estimate operating margins in 2021 and 2022 of 16.2% and 16.4%, respectively, which are modestly above its peers’ averages of 15.7% and 15.6%, while we also estimate ROE in 2021 and 2022 of 24.9% and 22.5%, respectively, which are below its closest peer’s ROE of 29.2% and 24.7%. Based on a current P/E target multiple of roughly 6.5x against our 2023E EPS, our Dec. 2022 price target of $28 represents upside potential of 28% from current levels, which, while above its higher-growth small-cap peers’ average of 13%, is roughly in-line with our universe average of 29%; hence we rate the stock Neutral on a relative basis."

For an analyst ratings summary and ratings history on Green Brick Partners click here. For more ratings news on Green Brick Partners click here.

Shares of Green Brick Partners closed at $21.81 yesterday.

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