Futures slip, bank earnings ahead, Powell to speak - what’s moving markets
On Wednesday, UBS analyst John Lovallo adjusted the price target for PulteGroup (NYSE:PHM) stock, reducing it to $141 from the previous $151, while continuing to endorse the stock with a Buy rating. Currently trading at a P/E ratio of 7.11x and showing strong financial metrics according to InvestingPro data, the stock appears undervalued based on its Fair Value assessment. The revision follows PulteGroup’s first quarter financial results for 2025 and updated forecasts, leading to a recalibration of the company’s earnings per share (EPS) estimates for the next few years.
Lovallo noted that the new estimates for PulteGroup’s EPS have been decreased to $11.55 for 2025, from an earlier projection of $12.35. Similarly, the 2026 EPS forecast has been revised down to $12.75 from $13.65, and the 2027 estimate has been adjusted to $14.10 from $14.95. The lowered expectations are primarily due to anticipated softer sales volumes and marginally reduced margins.
Despite the lowered price target, UBS’s valuation of PulteGroup shares remains grounded on a price-to-earnings (P/E) multiple of approximately 11 times the anticipated 2026 EPS. The firm acknowledges PulteGroup’s strategic management of sales pace against pricing, which has been instrumental in driving the company’s impressive 29.1% gross profit margin and industry-leading returns. InvestingPro analysis reveals the company maintains a strong financial health score of 3.35 (rated as "GREAT"), with robust cash flows that sufficiently cover interest payments.
UBS also highlights the benefit of PulteGroup’s diverse customer base, which comprises about 40% first-time buyers, 40% move-up buyers, and 20% active adults. This mix is seen as a key factor in supporting the company’s profitability and offering some level of protection amidst the variable conditions of the homebuying market.
The analyst anticipates that PulteGroup’s consistent performance and varied business model will continue to yield industry-leading gross margins and return on equity, currently at an impressive 27%. Furthermore, the current P/E multiple, which is considered undemanding at roughly 8 times the projected 2026 EPS, coupled with the tendency for homebuilder stocks to rebound early during a recovery in market sentiment and estimates, is viewed as presenting an attractive investment opportunity. For deeper insights into PulteGroup’s valuation and 12+ additional exclusive ProTips, access the comprehensive Pro Research Report available on InvestingPro, which provides detailed analysis of this and 1,400+ other US stocks.
In other recent news, PulteGroup reported a strong start to 2025, surpassing earnings expectations for the first quarter. The company posted earnings per share (EPS) of $2.57, exceeding the forecasted $2.47, and reported revenue of $3.89 billion, which was $40 million above expectations. Despite a 2% decline in home sales revenue year-over-year, PulteGroup maintained robust gross margins at 27.5%. The company’s net income reached $523 million, although it experienced a 7% decrease in closed homes. Analysts from Barclays (LON:BARC) revised their price target for PulteGroup to $98 from $100, maintaining an Equalweight rating, due to concerns about the company’s strategy of reducing housing starts, which could indicate weaker demand. CEO Ryan Marshall expressed confidence in long-term housing demand, while CFO Jim Ossowski noted readiness to adjust land spending based on buyer demand. PulteGroup has set a full-year home delivery guidance of 29,000-30,000 homes, with expectations of a 3-5% increase in quarterly community count.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.