Zacks Investment Research upgraded shares of DR Horton Inc. (DHI) from NEUTRAL to OUTPERFORM on May 15, 2013, with a target price of $33.00.
We are upgrading our recommendation on D.R. Horton from Neutral to Outperform following solid results in the second quarter of fiscal 2013. The company beat estimates for both revenues and earnings which grew 146.2% and 48.7%, respectively year over year driven by increased volumes and better pricing power as housing markets recovers steadily. Moreover, homes sold, closed and in backlog, all increased by more than 30%. In fact, pre-tax income in the first half of 2013 increased three-folds from the 2012 levels. Improved market conditions, increased investments in land in high-demand markets, efficient inventory management and improved SG&A ratio boosted profits. Profitability is expected to continue to improve further on the back of its solid balance sheet and improved liquidity position allowing it to re-invest in growth opportunities increased pricing power and rising homes inventory and land position. The company's geographic diversity and solid cost discipline are other positive factors.
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