On Wednesday, Keefe, Bruyette & Woods announced a significant reduction in the price target for Meritage (NYSE:MTH) Homes Corporation (NYSE:MTH), more than halving it from $194.00 to $97.00. Despite this substantial adjustment, the firm has maintained a Market Perform rating for the home construction company's stock.
The adjustment by the Keefe, Bruyette & Woods analyst comes in response to Meritage Homes' recent declaration of a two-for-one stock split. This split was executed as a stock dividend, which was payable on January 2 and became effective the following day, January 3.
The analyst's decision to revise the price target reflects the changes brought about by the stock split, resulting in a recalibration of the firm's estimates for Meritage Homes' stock value.
The new target is intended to align with the post-split trading price and provide an updated assessment for investors considering the company's shares. With a market capitalization of $5.39 billion and an "GOOD" financial health rating from InvestingPro, the company maintains a strong financial position with a current ratio of 10.12x.
Meritage Homes Corporation has not yet provided a comment on the revised price target or its implications. The stock split is a strategic move that typically aims to make shares more accessible to a broader range of investors by reducing the price per share, without affecting the overall market capitalization of the company.
Investors and market watchers will be closely observing the performance of Meritage Homes stock following this price target adjustment and the recent stock split. The company's ability to meet the expectations set by market analysts will be an important factor in future evaluations and ratings, with the next earnings announcement scheduled for January 29, 2025.
For deeper insights into Meritage Homes' valuation and financial health, investors can access comprehensive analysis and 12 additional ProTips through InvestingPro's detailed research reports.
In other recent news, Meritage Homes Corporation reported a robust Q3 2024 performance with home closing revenue of $1.6 billion and a gross margin of 24.8%, despite a 6% year-over-year decrease in the average selling price to $406,000. The company also announced a two-for-one stock split and the acquisition of Elliott Homes, aiming to strengthen its position in the Gulf Coast markets. However, Meritage Homes' stock was downgraded to neutral by JPMorgan due to a comparative analysis of the company's valuation metrics and was also downgraded from Outperform to Market Perform by Raymond (NS:RYMD) James due to concerns over housing affordability.
On the other hand, Goldman Sachs upgraded its rating from Neutral to Buy, anticipating the company to benefit from housing market dynamics over the next 12-18 months. For the full year 2025, Meritage Homes projects closings between 16,500 and 17,500 units with home closing revenue ranging from $6.7 billion to $7.1 billion.
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