UPDATE: J.P. Morgan Initiates Coverage on WCI Communities on Fair Valuation

In a report published Wednesday, J.P. Morgan analyst Michael Rehaut initiated coverage on WCI Communities WCIC with a Neutral rating and $20.50 price target. In the report, J.P. Morgan noted, “We are initiating coverage of WCI Communities (WCIC) with a Neutral rating and a Dec. 2014 price target of $20.50. WCIC represents a high quality ‘pure play' on the recovering Florida housing market, in our view, featuring industry leading gross margins and strong order growth visibility due to the company's long land position and less interest rate sensitive homebuyer. However, we believe these attractive fundamentals are fairly reflected by the stock's relative valuation, trading at 5.6x our 2016 Earnings Power, which represents a 22% premium to its smaller-cap peers. Hence, we rate WCIC Neutral on a relative basis amid our positive sector stance.” WCI Communities closed on Tuesday at $15.95.