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Research Alert: CFRA Keeps Strong Buy Opinion On Shares Of Meritage Homes Corp.

05/10/2021 10:17

02:15 PM EDT, 05/10/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We think MTH's outlook points to strong growth with a 20% plan increase to 300 selling communities by mid-2022. We believe MTH can grow faster than peers with its disciplined processes for building entry-level homes. We raise our target by $25 to $140, near the peer average at 9.0x and 5-year historic average at 9.1x. What's driving low P/E multiples is higher earnings growth and rear mirror risks that housing is a cyclical business. We raise our 2021 EPS estimate $1.45 to $15.05 and 2022's $2.15 to $17.00. We see gross margins at the 25%-26% level in 2021 vs. 24% in Q4 2020. In Q1 2021, MTH's net order value rose 11%, leading to $2.1 billion in backlog. We think MTH can reach its target of adding new selling communities with 75%-80% of total new lots planned for entry-level homes. We see more room to grow in the West region (includes AZ, CA, and other states) with fewer communities that reported lower new order values, down 4% (36% of total order value), followed by Texas +14% (29%) and East +43% (35%).