D.R. Horton (DHI) PT Lowered to $168 at BTIG
BTIG analyst Carl Reichardt Jr. lowered the price target on D.R. Horton (NYSE: DHI) to $168.00 (from $169.00) while maintaining a Buy rating.
The analyst comments "DHI reported F2Q EPS of $3.52, well ahead of our $3.14 estimate ($3.07 Factset consensus). The beat was driven by better delivery volume, higher gross margin, lower SG&A/homebuilding sales and a lower tax rate than we expected, partially offset by lower ASP, rental PTI and financial services PTI. Unit orders grew 14% vs. our expectation of 16%. The last six weeks of orders have seen a "very good" sales pace in line with plan despite rate volatility; this plus now-normal cycle times (4 months) and a high level of spec under construction (27.6K, + 11% yr/yr) gives us increased confidence in the newly-raised FY volume guide (midpoint +2%). We also believe mgmt's relative confidence in margins (flat-to-up sequentially in 3Q from 2Q) was a positive surprise to many. That said, volume strength this quarter probably robbed from F2H (a 2Q beat of ~2,300 vs. the midpoint of the guidance increase of 1,500) due to an unusually large number of homes sold & closed intra-quarter. We are also slightly more conservative in our GM assumptions for 2H than we were given stubbornly high interest rates that we believe could continue to require 100-150 bp mortgage rate buydowns in F2H. As such, despite the beat and a ~$500M increase in our HB sales assumption for FY24, we tweak our FY24 EPS estimate to $14.55 from $14.70; FY25 goes to $16.40 from $16.60. Despite these adjustments, we continue to see DHI as well-positioned to outsell peers given its deep local market-share positions, low-cost and efficient-production business model, breadth of geographic markets, and affordable entry-level home focus, while carrying low leverage and producing high returns. We continue to rate DHI Buy, but based on our new estimates, our PT goes to $168 from $169."