A dramatic sell-off has opened up attractive entry points for shares of PulteGroup , according to Wedbush. The investment firm upgraded shares of the home construction stock to outperform from neutral. Wedbush’s 12-month price target of $135 is around 25% higher than where shares closed Thursday. Since hitting an all-time high of $149.47 on Oct. 18, shares of Pulte have retreated by 27%. In contrast, the S & P 500 has gained 2% over that time. Analyst Jay McCanless said the stock’s sell-off “appears overdone.” “In addition to Pulte’s favorable customer mix, consistent buyback, and pristine balance sheet, we also see a couple other catalysts for the name,” McCanless wrote. “Over the long term, we think 50% to 60% of Pulte’s buyer base may be less rate sensitive than some other companies’ sales mix.” PHM 1Y mountain PHM chart The company’s balance sheet also looks “pristine,” with McCanless expecting the company to be in a net cash position in the fiscal fourth quarter of 2024. Adding to Pulte’s potential undervaluation at current levels is an improving backdrop for the mortgage industry. The analyst added that, “if President Trump’s tariffs prove less onerous than the Treasury market appears to be assuming, that could push mortgage rates lower.” He also said “mortgage credit availability may finally start loosening this year.” Analysts are split on the stock. According to LSEG, nine of the 18 who cover PulteGroup rate it as a buy or strong buy. The other nine have hold ratings on it. That said, the average price target signals nearly 37% upside.
Wedbush upgrades this homebuilder, says recent sell-off is ‘overdone’