Seaport flips ratings on four homebuilders amid rising supply, margin pressure

Seaport Research has debated the pros and cons of the firm’s negative outlook on homebuilders since the sectors’ Q4 selloff, but remains “negatively biased for now,” citing regional margin risk, rising new supply, and valuations 15%-20% above trough levels with a strong negative earnings bias. In that context, the analyst downgraded both PulteGroup (PHM) and Taylor Morrison (TMHC) to Sell from Neutral as it sees risk being higher than peers and cites Florida exposure, while upgrading Toll Brothers (TOL) to Neutral from Sell, citing its California mix post wildfires, and LGI Homes (LGIH) to Neutral from Sell, citing valuation.