Seaport Research upgrades five homebuilders to Buy, three to Neutral

As previously reported, Seaport Research analyst Kenneth Zener upgraded five homebuilder stocks to Buy – raising KB Home (KBH) with a $79 price target, Lennar (LEN) with a $154 price target, TRI Pointe (TPH) with a $41 price target, M/I Homes (MHO) with a $151 price target and D.R. Horton (DHI) with a $164 price target – while also upgrading Meritage Homes (MTH), Taylor Morrison (TMHC) and PulteGroup (PHM) all to Neutral. Since the firm’s sector downgrade last September, the homebuilders have fallen 30% on an absolute basis, consistent with past cycles’ early cycle underperformance, the analyst tells investors. Within “a highly correlated sector,” the firm sees about 27% upside on average for its Buy-rated names and says about its Neutral-rated stocks that “sector bias/rotation supersedes fundamental headwinds.”