Zacks Investment Research upgraded shares of PulteGroup, Inc. (PHM) from UNDERPERFORM to NEUTRAL on December 05, 2013, with a target price of $19.00.
Pulte's third-quarter earnings of $0.45 per share surpassed the Zacks Consensus Estimate by 32.3% and grew 50% year over year driven by margin growth and pricing power. Revenues beat the Zacks Consensus Estimate and increased 21.4% year over year driven by higher pricing which made up for the order shortfall. Estimates largely moved upwards after the better-than-expected third-quarter results, encouraging us to return to a Neutral recommendation on the stock. Moreover, we commend Pulte's solid long-term fundamentals, strong cash position and improving profitability. However, Pulte's net orders have been weak in 2013 due to rising interest rates, increasing home prices and a lower community count. In addition to rising interest rates, possible changes in federal lending procedure and lack of overall economic recovery also create an overhang preventing us from being too optimistic on the stock.
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