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Investing.com - RBC Capital raised its price target on D.R. Horton (NYSE:DHI) to $117.00 from $105.00 on Wednesday, while maintaining an Underperform rating on the homebuilder’s stock. The company, currently trading at $149.27 with a P/E ratio of 11.89, has shown impressive momentum with a 16.72% return over the past week.
The price target increase follows D.R. Horton’s better-than-expected fiscal third-quarter results and implied fourth-quarter guidance, which prompted RBC to increase its fiscal year 2025 earnings per share estimate by 6%. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.1 out of 5, despite projections of an 8% revenue decline for the current fiscal year.
Despite the target price adjustment, RBC remains cautious on the homebuilder’s prospects, noting it continues to forecast estimates below Wall Street consensus for fiscal year 2026.
The investment firm cited ongoing concerns about D.R. Horton’s gross margin percentage guidance, higher incentives, and average selling price weakness as factors that could lead to downside in estimates and return on tangible equity.
RBC also expressed concerns about the lack of a meaningful or sustained inflection in fundamentals, with potential risks related to costs and what it described as a stretched affordability and consumer backdrop.
In other recent news, D.R. Horton has reported its fiscal third-quarter 2025 earnings, showcasing strong financial performance. The company achieved earnings per share of $3.36, surpassing both the consensus estimate of $2.92 and Citizens JMP’s expectation of $2.80. Revenue for the quarter also exceeded forecasts, reaching $9.23 billion compared to the anticipated $8.8 billion. This earnings beat is attributed to higher deliveries and improved margins in the company’s core homebuilding operations, as well as enhanced efficiency in selling, general, and administrative expenses. Citizens JMP analyst Aaron Hecht reiterated a Market Outperform rating on D.R. Horton stock, maintaining a price target of $180.00. These recent developments reflect strong operational execution by D.R. Horton, fostering positive sentiment among investors.
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