PulteGroup (PHM +1.2%) is upgraded to to Overweight from Neutral at J.P. Morgan as part of an overall cautious report on the homebuilding sector.
Although the sector is up 44% YTD, driven by a rebound in several fundamental metrics and a decline in interest rates, the stocks still contain "some modest remaining upside potential," JPM analyst Michael Rehaut writes while cautioning that volatility in the group over the last 18 months requires a disciplined approach to the group.
PHM's valuation is attractive relative to the company's fundamental outlook, Rehaut says, who also upgrades Century Communities (CCS +4.4%) to Overweight from Neutral and Meritage Homes (MTH +3.5%) to Neutral from Underweight.
Also, Rehaut downgrades NVR (NVR +0.5%) to Underweight from Neutral following the stock's YTD outperformance and LGI Home (LGIH +2.4%) to Neutral from Overweight, while reiterating Overweight ratings on Lennar (LEN +1.4%), Taylor Morrison (TMHC +2.2%) and William Lyon Homes (WLH +3%).
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