Meritage Homes Corp (MTH) has disclosed a new risk, in the Debt & Financing category.
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Meritage Homes Corp faces significant counterparty risk related to its capped call transactions associated with the 2028 Convertible Notes. These derivative transactions, intended to mitigate stock dilution and cash payouts, expose the company to credit risk from its option counterparties, which are unsecured and reliant on the financial stability of investment-grade institutions. The potential for default by any option counterparty, especially under adverse market conditions, could exacerbate stock dilution and financial exposure. Consequently, Meritage Homes Corp’s financial outcomes are uncertain as they cannot assure the viability of these counterparties.
The average MTH stock price target is $217.83, implying 18.75% upside potential.
To learn more about Meritage Homes Corp’s risk factors, click here.
