Meritage Homes: Strategic Positioning and Financial Health Drive Buy Rating

Analyst Rafe Jadrosich from Bank of America Securities maintained a Buy rating on Meritage (MTH – Research Report) and keeping the price target at $82.00.

Rafe Jadrosich has given his Buy rating due to a combination of factors that highlight Meritage’s strategic positioning and financial health. The company is gaining market share and has improved its return on equity, making its valuation attractive, especially with a price-to-book ratio of less than one and low debt-to-capitalization. Additionally, Meritage’s transition to a 60-day closing model is expected to appeal to home buyers and real estate brokers, enhancing its competitiveness against the resale market.
Meritage’s growth prospects are further supported by an anticipated increase in community openings, which should accelerate delivery growth in the latter half of 2025. The company’s backlog conversion ratio, although currently high, is expected to stabilize, contributing to a more predictable revenue stream. Moreover, Meritage’s strategic use of off-balance sheet financing and its focus on maintaining a balanced debt-to-capital ratio demonstrate prudent financial management. These factors collectively underpin the Buy rating, reflecting confidence in Meritage’s ability to capitalize on market opportunities and deliver shareholder value.

Jadrosich covers the Consumer Cyclical sector, focusing on stocks such as KB Home, Mohawk, and PulteGroup. According to TipRanks, Jadrosich has an average return of 7.7% and a 54.97% success rate on recommended stocks.