JPM sees headwinds hammering homebuilding stocks

LGI Homes

10/03/2022 12:49

** J.P. Morgan lowers price targets of homebuilding stocks
by 24% through December 2022 as it expects several headwinds,
including inflation and geopolitical conflicts, to continue over
the near- to medium-term
    ** The brokerage said while demand remained strong,
affordability has reduced over the past year as supply sunk to
record lows
    ** Decline of home-building stocks worsened in the first 7-8
weeks as investors swallowed an "extended Fed tightening cycle"
- JPM
    ** JPM also cuts 2023 EPS multiples to 4.6x from 6.1x
    ** Maintains "underweight" rating on LGI Homes Inc  LGIH.O 
and "overweight" on D R Horton Inc  DHI.N , Lennar Corp  LEN.N 
and Pultegroup Inc  PHM.N , Century Communities Inc  CCS.N  and
Taylor Morrison Home Corp  TMHC.N 
    ** JPM downgrades Meritage Home Corp  MTH.N  and Toll
Brothers Inc  TOL.N  to "neutral", Green Brick Partners Inc
 GRBK.N  to "underweight" and upgrades KB Home  KBH.N  to
"overweight"
    ** YTD, the Philadelphia SE Housing Index  .HGX  fell 18%,
while S&P 1500 Home Building Index  .SPCOMHOME  plunged nearly
22%

 (Reporting by Mehnaz Yasmin in Bengaluru)
 ((Mehnaz.Yasmin@thomsonreuters.com))