Raymond James Reiterates Market Perform Rating on D.R. Horton (DHI)

Raymond James analyst Buck Horne reiterated a Market Perform rating on D.R. Horton (NYSE: DHI).

The analyst comments "We are maintaining our Market Perform rating on D.R. Horton after reviewing last week’s F1Q25 results, as continued mortgage rate volatility and a surge of new community openings has led to a buildup of finished unsold inventory (~6.2 finished homes/community) that is likely to continue putting downward pressure on DHI’s margins throughout the 2025 spring selling season. With mortgage rates recently breaking through the 7% level, entry-level focused homebuilders have faced difficult decisions on how quickly to liquidate unsold inventory moving through the production pipeline. With DHI’s inventory of aging completed spec homes (finished more than six months ago) rising over 75% y/y, more aggressive pricing decisions are likely ahead — resulting in guidance for a further ~100 bp sequential decline in homebuilding gross margin. On the positive side, we think DHI maintains an enviable market position with an industry-leading rental-housing platform (both multifamily and SFR) that can help maintain production efficiency. But with near-term earnings under pressure (FY25E reduced another 4%), DHI’s valuation remains at the very high-end of its peers at 1.9x BV. Accordingly, we believe a neutral stance is warranted until buyer affordability stabilizes."

For an analyst ratings summary and ratings history on D.R. Horton click here. For more ratings news on D.R. Horton click here.

Shares of D.R. Horton closed at $142.92 yesterday.

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