UPDATE: Compass Point Upgrades PulteGroup to Buy on Mortgage Buyback Exposure

Compass Point raised its rating on PulteGroup

from Neutral to Buy and raised its price target from $9 to $19. Compass Point noted, "Given that PHM is the only publicly traded home builder with material mortgage repurchase exposure, we apply a sectorhigh 7% ROI, or 14x P/E, to 2013 earnings, and still arrive at an attractive valuation. Recall that we estimate that between $0.21/share and $0.95/share of PHM's current $4.75/share book value is at risk of future mortgage repurchase losses. Also note that PHM's DTA valuation allowance of $2.5 Billion on an absolute basis is substantially larger than those of all other builders, and while the company should be able to partially reverse the DTA in late-2013, a full reversal may take longer. PulteGroup closed at $16.43 on Wednesday.