Bank of America Turns Bullish on 2 Big Homebuilding Names

Both stocks are in negative territory in 2022

Deputy Editor
Feb 28, 2022 at 10:30 AM
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Bank of America Securities gave two major homebuilding stocks double upgrades to "buy" from "underperform" this morning; Toll Brothers Inc (NYSE:TOL) and PulteGroup, Inc. (NYSE:PHM).The analyst noted a favorable risk/reward profile for these stocks, as the sector has underperformed so far this year. Both securities are bucking the broad-market pullback as a result, with TOL last seen up 1.8% at $54.59, and PHM 2% higher at $49.63. 

The analyst isn't the only member of the brokerage bunch chiming in, however, at least not for Toll Brothers, which also received a price-target cut to $61 from $72 at Barclays. This puts the 12-month consensus price target at $70.86, which is still a hefty 32.2% premium to Friday's close. Meanwhile, heading into today, just three of the 13 covering TOL considered it a "buy" or better, leaving plenty of room for analysts to follow Bank of America's lead. 

Pulte Group, meanwhile, has six "strong buy" ratings, and five "hold" or worse ratings on the books. The 12-month consensus price target is comparable to TOL's -- sitting at $66.67 and representing a 33.4% premium to the stock's last close. 

Both stocks have stumbled into the year, with TOL suffering a 25% year-to-date deficit, and PHM down 13.6% in 2022. The 20-day moving average has helped guide both securities lower during the past few months, too, putting Toll Brothers stock at an annual low of $45.17 in the middle of last week. PulteGroup stock, on the other hand, toppled the trendline during Friday's trading, and continues to distance itself from the area today. 



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