Compass Point Upgrades D.R. Horton Inc To Buy

Compass Point Research & Trading upgraded D.R. Horton, Inc. DHI from Neutral to Buy and raised its price target from $22 to $26 in a report issued Monday.

The upgrade from analysts Wilkes Graham and Megan Dunleavy was based on the company’s “above average exposure to homebuyers who rely on credit due to their sector-low price point.”

Overall, the analysts expressed that following “a year of disappointing housing data points, difficult lofty yoy comps, and continued order growth deceleration in conjunction with average order pricing (AOP) growth weakness, we believe that the 2014 Hope Trade will be fueled this year by investor hopes for loosening credit in 2015 and beyond. As such, we believe that the lower price point builders should outperform, and that investors should focus on these home builders until February.”

In addition to the Hope Trade setup, “since the beginning of the year, builders have gone from 177 percent of book to 135 percent of book, and are currently trading well below the 165 percent price/book implied by our updated price targets,” according to Graham.

D.R. Horton, Inc. recently traded at $19.82, down 0.10 percent.