"Builders Poised for Further Near-Term Upside" - Barclays

Analyst Michael Dahl is raising his price target on seven of nine US builders citing a likelihood for the group to beat Q1 orders. He says February Buyer Traffic Index rose 5 points MoM and now rests at 66.8 (from 61.8 in January).

• CalAtlantic Group (NYSE: CAA) stays at Underweight, PT raised from $34.00 to $35.00
• D.R. Horton (NYSE: DHI) stays at Equalweight, PT raised from $30.00 to $34.00
• KB Home (NYSE: KBH) stays at Underweight, PT raised from $15.00 to $16.00
• Lennar (NYSE: LEN) stays at Overweight, PT raised from $51 to $56.00
• Meritage Homes (NYSE: MTH) stays at Underweight, PT stays at $36.00
• PulteGroup (NYSE: PHM) stays at Overweight, PT raised from $23.00 to $24.00
• Taylor Morrison Home (NYSE: THMC) stays at Equalweight, PT raised from $21.00 to $22.00
• Toll Brothers (NYSE: TOL) stays at Equalweight, PT raised from $34.00 to $37.00
• Tri Pointe Group (NYSE: TPH) stays at Overweight, PT stays at $14.00

Speaking to the group, Dahl comments (emphasis ours) "Our checks point to strong buyer interest at the start of spring. We have increased our order growth estimate by 4%, to +13% y/y. Near-term catalysts seem favorable, and homebuilder stock can likely trade higher on strong order prints. However, even after incorporating these changes, our FY’17 EPS estimates only increased 1% and ’17 ROE estimates by ~14 bps. We still expect margins to remain challenged, limiting the improvement."

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