UPDATE: Sterne Agee Initiates D.R. Horton at Buy on Rising Demand, Low Cost of Capital

Sterne Agee initiated coverage on D.R. Horton

with a Buy rating and a $29.00 price target. Sterne Agee analyst Jay McCanless commented, "We believe the company is raising prices in all of its markets due to less competition from existing homes for sale. We estimate this pricing power should produce multiyear double-digit EPS growth. […] Our price target represents a 20x P/E multiple on our FY14E EPS of $1.46, which is at the high end of our FY14 P/E valuation range of 15x to 20x FY14E EPS. We believe DHI's pricing power, multi-year land position, and growing demand warrant a top-end valuation." D.R. Horton closed at $23.77 on Wednesday.