D.R. Horton stock price target raised to $161 from $135 at KBW

Investing.com - D.R. Horton (NYSE:DHI) received a price target increase from Keefe, Bruyette & Woods on Friday, with the firm raising its target to $161.00 from $135.00 while maintaining a Market Perform rating.

KBW cited better-than-expected gross margins as a key factor in the adjustment, noting that third-quarter gross margin of 21.8% exceeded their estimate of 21.0%. This performance aligns with the company’s trailing twelve-month gross margin of 23.58%, as reported by InvestingPro. The firm raised forward earnings estimates by 5% based on the improved margin outlook, partially offset by lower deliveries and average selling prices.

D.R. Horton’s third-quarter orders were flat year-over-year, outperforming KBW’s projection of a 4% decline, while closings fell 4% compared to the analyst’s estimate of a 9% drop. The homebuilder provided fourth-quarter gross margin guidance of 21.0-21.5%.

KBW forecasts modest growth for the homebuilder, projecting 0.5% delivery growth for the fourth quarter of 2025 and 1.8% growth for the full year 2026. The firm expects gross margins to reach 21.25% in Q4 2025 and 21.35% for 2026.

Despite the price target increase, KBW maintained its Market Perform rating on D.R. Horton shares, citing valuation concerns even while acknowledging the company’s favorable position in the homebuilding market. The stock currently trades at a P/E ratio of 11.58, and according to InvestingPro’s Fair Value analysis, the stock appears to be fairly valued. InvestingPro subscribers have access to 15 additional key insights about D.R. Horton, including detailed valuation metrics and growth prospects.

In other recent news, D.R. Horton reported impressive earnings for the third quarter of 2025, with earnings per share reaching $3.36. This figure surpassed analyst forecasts of $2.90, as well as Citizens JMP’s expectation of $2.80. The company’s revenue also exceeded expectations, totaling $9.23 billion against a forecast of $8.8 billion. RBC Capital responded to these results by raising its price target for D.R. Horton from $105 to $117, although it maintained an Underperform rating. Meanwhile, Citizens JMP reiterated its Market Outperform rating with a price target of $180. The earnings beat was attributed to higher deliveries and margins in core homebuilding operations, along with improved efficiency in selling, general, and administrative expenses. These developments highlight the company’s strong performance in the recent quarter.

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