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Investing.com - Raymond (NSE:RYMD) James raised its price target on Taylor Morrison Home (NYSE:TMHC) to $70.00 from $65.00 on Thursday, while maintaining an Outperform rating on the homebuilder’s stock. The new target aligns with InvestingPro analysis showing the stock trading at an attractive P/E ratio of 6.9x and currently appearing undervalued based on its Fair Value estimate.
The firm cited Taylor Morrison’s consistent performance in the second quarter of 2025 despite challenging market conditions. Raymond James noted that the results validate the benefits of the company’s diversified customer demographics, balanced geographic presence, and premium community locations. This strong performance is reflected in the company’s "GREAT" financial health score on InvestingPro, with particularly robust liquidity metrics showing current assets more than 7.5x short-term obligations.
Raymond James acknowledged that buyer demand remains variable, fluctuating with weekly mortgage rate movements, and that elevated incentives are still necessary to maintain consistent absorption rates. The firm has taken a conservative approach to its forward estimates, reducing its 2026 projections by 10%. According to InvestingPro, which offers 8 additional key insights for subscribers, the company maintains strong profitability with a 16% return on equity over the last twelve months.
The revised estimates project margins stabilizing around 22% and a roughly 4% year-over-year decline in closings, as Taylor Morrison prioritizes price over pace given its premium land positions. Despite these adjustments, Raymond James still forecasts Taylor Morrison generating a 12% forward return on equity, above-average margins, and sufficient cash flow to accelerate share repurchases.
Raymond James believes Taylor Morrison’s strong balance sheet and liquidity should support a return on invested capital-adjusted valuation more in line with larger-cap peers, compared to the current approximately 30% discounts on 2026 price-to-earnings and book value metrics.
In other recent news, Taylor Morrison Home Corporation reported strong second-quarter results, surpassing analysts’ expectations. The company achieved adjusted earnings of $2.02 per share, which exceeded the anticipated $1.95 per share. Revenue also outperformed projections, reaching $2 billion compared to the expected $1.93 billion. Taylor Morrison delivered 3,340 home closings during the quarter, marking a 4% increase year-over-year, although the average closing price decreased by 2% to $589,000. Despite the drop in average closing price, total home closings revenue rose by 2% from the previous year. The homebuilder reported a home closings gross margin of 22.3% and an adjusted gross margin of 23.0%. Additionally, the company improved its selling, general, and administrative expenses by 90 basis points to 9.3% of revenue. These developments highlight Taylor Morrison’s ability to navigate challenges in the housing market effectively.
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