Wedbush Reiterates Beazer Homes At Outperform

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Beazer Homes USA, Inc. BZH boasts multiple catalysts and favorable trends that continues to support the bullish case for the stock, according to Wedbush.

The Analyst

Wedbush's Jay McCanless maintains an Outperform rating on Beazer Homes with a $17 price target.

The Thesis

Beazer Homes recently maintained its position that fiscal third quarter will see the trough in gross margins as homes sold in prior quarters and below average margins will close in the quarter, McCanless wrote in a note. The company also expects to see 5% to 10% order growth on 5% to 10% community growth in the quarter.

Management said during its second-quarter conference call it saw a ramp in demand in February and March which carried over into April. However, the analyst said the company didn't offer any commentary on May or June metrics although falling mortgage rates suggests a 7.5% order growth estimate for the third quarter is an "achievable" goal.

Meanwhile, Beazer's land held for future development (LH) in June 2018 was around $319 million, or 19% of inventory. As of the end of the second quarter, LH assets and properties for sale fell 87% to $41 million or 2.5% of inventory. The reactivation of the assets will offer the potential for community growth opportunities in the near term.

Price Action

Shares of Beazer Homes closed Tuesday at $9.87, higher by 1.23%.

Related Links:

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Posted In: Analyst ColorAnalyst RatingshomebuildershomesJay McCanlessWedbush
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