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On Thursday, BTIG analysts adjusted their valuation of Taylor Morrison Home (NYSE:TMHC), raising the price target to $79.00 from the previous $75.00, while maintaining a Buy rating on the shares. According to InvestingPro data, the stock appears undervalued, trading at just 6.8 times earnings with a price-to-book ratio of 0.98. The revision follows Taylor Morrison’s first-quarter earnings for 2025, which surpassed expectations. The company reported earnings per share (EPS) of $2.07, significantly outperforming BTIG’s estimate of $1.78 and the consensus of $1.88.
The homebuilder’s performance was bolstered by higher-than-anticipated volume, pricing, and gross margins. Additionally, lower sales, general, and administrative expenses (SG&A/sales) coupled with a reduced tax rate contributed to the strong results. Despite a 9% year-over-year decline in new order volume, which was slightly more than BTIG’s forecasted 6% decrease, Taylor Morrison has seen a fluctuation in April sales. However, momentum has picked up since the event referred to as "Liberation Day," with April orders trending near the first quarter’s average absorption rate of 3.3 per month.
Taylor Morrison anticipates some margin pressure in the second quarter as they work to move speculative inventory, but even with this consideration, the company’s full-year guidance exceeded BTIG’s projections. Consequently, BTIG has increased their EPS estimates for Taylor Morrison, with expectations for 2025 rising to $8.40 from $7.60, and for 2026 to $8.80 from $7.90.
The analysts at BTIG believe that Taylor Morrison’s stock is undervalued, trading near book value despite a return on equity of 16%. InvestingPro subscribers have access to detailed valuation metrics and 8 additional ProTips that provide deeper insights into TMHC’s investment potential. They highlighted the company’s gradual shift towards higher-margin resort lifestyle communities, improved efficiencies in construction for move-up buyers, ongoing debt reduction, and management’s aggressive share repurchase efforts as additional positive factors supporting the Buy rating.
The improved outlook and price target reflect a belief in the company’s structural improvements and resilience amidst competition in the lower-end market segment. BTIG’s analysis suggests that Taylor Morrison’s strategic initiatives are likely to continue contributing to its financial performance and shareholder value.
In other recent news, Taylor Morrison Home Corp reported strong financial results for the first quarter of 2025, exceeding analysts’ expectations. The company achieved an adjusted earnings per share of $2.18, surpassing the forecast of $1.89, and reported revenue of $1.8 billion, slightly above the anticipated $1.78 billion. This performance was driven by a 12% year-over-year increase in home closings revenue and a 25% rise in adjusted EPS. The company’s gross margin on home closings improved by 80 basis points to 24.8%. Taylor Morrison also provided guidance for 2025, targeting 13,000 to 13,500 home deliveries and a home closings gross margin of around 23%. The company plans a share repurchase target of approximately $350 million for the year. Additionally, Taylor Morrison is optimistic about achieving 20,000 closings by 2028. While macroeconomic uncertainties remain, the company emphasized its diversified consumer strategy as a key factor in its resilience and growth prospects.
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