BZH - Beazer Homes stock rises after upgrade to Outperform at Wedbush

2023-06-28 09:18:37 ET

Beazer Homes USA ( NYSE: BZH ) stock perked up 2.7% in Wednesday premarket trading after Wedbush upgraded shares of the homebuilder to Outperform from Neutral as a rebound in new housing demand is expected to drive up the company's price-to-tangible book value multiple.

"We believe the rebound in new housing demand thus far in 2023 has been driven by a lack of existing home competition in most markets and by tools like mortgage rate and closing cost incentives that help buyers solve for the payment they need," analyst Jay McCanless wrote in a note.

In turn, the sell-side analyst anticipates BZH's 2024 price-to-TBV multiple to approach 0.9 times compared with the current 0.7x multiple. He also increased his 2024 EPS estimate to $4.67, vs. $4.04, from $4.24, and his full-year revenue estimate to $2.3B, vs. $2.07B consensus, from $2.2B.

Beazer's ( BZH ) balance sheet is expected to improve, the note said, which could provide the firm flexibility to repay its $211M term debt facility due in March 2025, or "potentially refinance the debt" if interest rates fall.

McCanless' Outperform rate diverges from the SA Quant system rating of Hold and aligns with the average Wall Street analyst rating.

The upgrade comes one day after homebuilder stocks rallied after a batch of economic reports showed a stronger-than-expected increase in home prices in April and a continuing decline in housing inventory.

More on Beazer Homes and the housing market:

• As Prices Of New Houses Drop, Sales Jump: Cut The Price And They Will Come
• Beazer Homes USA: Revenue Increases Due To Higher Prices In Q2 2023
• Real estate investors buy 49% fewer homes Y/Y in Q1, Redfin says

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