Homebuilder D.R. Horton Tops Q2 Earnings Estimates; Target Price $108 in Best Case

D.R. Horton, the largest homebuilder by volume in the United States, reported better-than-expected earnings and revenue in the fiscal second quarter and upgraded its guidance for full-year, sending its shares up about 2% in pre-market trading on Thursday.

The homebuilder said its net income attributable to D.R. Horton increased 93% to $929.5 million in the quarter ended March 31, or $2.53 per share, beating Wall Street consensus estimates of $2.18 per share. The company’s consolidated revenues increased 43% to $6.4 billion, above analysts’ expectations of $6.11 billion.

Homebuilder forecasts consolidated revenues in the range of $26.8 billion to $27.5 billion and homes closed between 82,500 homes and 84,500 homes in fiscal 2021.

Following the upbeat results, D.R. Horton shares rose about 2% to $94.85 in pre-market trading on Thursday.

D.R. Horton Stock Price Forecast

Eleven analysts who offered stock ratings for D.R. Horton in the last three months forecast the average price in 12 months of $98.00 with a high forecast of $108.00 and a low forecast of $85.00.

The average price target represents a 5.04% increase from the last price of $93.30. Of those 11 analysts, ten rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Several other analysts have also updated their stock outlook. Citigroup raised the price target to $109 from $92. D.R. Horton had its price objective boosted by stock analysts at KeyCorp to $98 from $90. The brokerage currently has an “overweight” rating. Barclays raised their price target to $95 from $81 and gave the company an “overweight” rating. BTIG Research raised their price target to $108 from $98 and gave the company a “buy” rating.

Moreover, Wolfe Research issued a $94.00 price target on the stock. JPMorgan Chase & Co. upgraded D.R. Horton from a “neutral” rating to an “overweight” rating.

Analyst Comments

“Residential construction has been a bright spot of the U.S. housing market during the pandemic, and we expect continued housing market strength over the next decade with annual housing starts reaching 1.6 million units by 2024. While affluent urban dwellers migrating to the suburbs was a key source of demand in 2020, we expect first-time buyers to be the main contributor to future housing demand,” noted Brian Bernard, equity analyst at Morningstar.

D.R. Horton’s balance sheet is the strongest it has been in years, and we expect the company will use its improved financial flexibility to invest in attractive growth opportunities, such as its recent Forestar endeavor. We believe that improving new-home demand, successful inventory management initiatives, and improved financial flexibility support future growth and improving ROICs.”

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