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On Monday, RBC Capital Markets adjusted its outlook on D.R. Horton stock (NYSE:DHI), reducing the price target to $105 from the previous $125. The firm maintained its Underperform rating on the home construction company’s shares, which currently commands a market capitalization of $36.73 billion. The revision follows D.R. Horton’s significant shortfall in fiscal second-quarter orders and a subsequent downtrend in the fiscal year 2025 revenue and delivery forecast, with recent data showing a 4.72% decline in revenue. According to InvestingPro analysis, seven analysts have recently revised their earnings estimates downward for the upcoming period.
The analyst at RBC Capital expressed concerns regarding the company’s future earnings, projecting a decrease of 10% and 21% for the fiscal years 2025 and 2026, respectively. The lower earnings estimates are a direct result of the recent order miss. Despite a guidance for gross margins of 24.11% in the fiscal third quarter that was not as weak as anticipated, the analyst remains cautious about D.R. Horton’s trajectory, noting a shift towards a more balanced short-term strategy in managing pace versus price. The company maintains strong fundamentals with a healthy current ratio of 5.46, indicating robust liquidity.
The report further highlighted several factors that could potentially impact the company’s growth and profitability. Rising incentives, a highly volatile interest rate and macroeconomic environment, looming cost pressures, and persistent consumer weakness were cited as key risks. The analyst’s outlook suggests a challenging period ahead for D.R. Horton, with expectations set for a continued decline in performance metrics.
D.R. Horton’s stock price may reflect these concerns as the market processes the implications of the revised price target and the analyst’s commentary on the company’s position and strategy in the face of an uncertain economic landscape. The new price target of $105 represents a notable adjustment from the previous target, signaling revised expectations for the company’s financial health and market performance.
In other recent news, D.R. Horton reported earnings for the second quarter of 2025, revealing a mixed financial performance. The company posted earnings per share (EPS) of $2.58, falling short of the forecasted $2.67, while revenue exceeded expectations, reaching $8.36 billion compared to the anticipated $8.15 billion. Despite the EPS miss, the revenue beat provided a positive counterbalance, and future guidance remains optimistic with expected revenues between $8.4 and $8.9 billion for the third quarter. Analyst Aaron Hecht from Citizens JMP revised the price target for D.R. Horton shares to $180, down from $210, but maintained a Market Outperform rating, citing market challenges such as fewer home deliveries and higher expenses. Hecht noted that affordability issues and tariff policies are affecting demand but believes there is still a need for more housing in the U.S. Additionally, D.R. Horton anticipates closing 22,000 to 22,500 homes in the third quarter, with a projected home sales gross margin of 21-21.5%. The company continues to adjust its strategies in response to changing market conditions, emphasizing its adaptability and strategic focus in the homebuilding sector.
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