July 16, 2012 at 09:04 AM EDT
MKM Partners Gets Bullish on U.S. Homebuilders; Upgrades D.R. Horton, Lennar to “Buy” (DHI, LEN)

Analysts at MKM Partners on Monday offered some bullish commentary D.R. Horton, Inc. (DHI) and Lennar Corporation (LEN).

The firm upgraded both DHI and LEN from “Neutral” to “Buy,” citing multiple factors that could lead to higher upside for the names.

An MKM analyst commented, “In the short-term we believe that new home sales growth trends will be an important driver of homebuilder valuations (rather than month-to-month fluctuations). We are currently forecasting acceleration in new home sales growth into Fall 2012, which should support further upside to builder valuations. However, we caution that beyond early Fall we believe multiples could begin to contract if our outlook for growth does not improve.”

DHI and LEN shares were mostly flat in premarket trading Monday.

The Bottom Line
Shares of D.R. Horton (DHI) have a .80% dividend yield, based on Friday’s closing stock price of $18.70. The stock has technical support in the $16 price area. If the shares can firm up, we see overhead resistance around the $20-$21 price levels. Shares of Lennar Corp (LEN) have a .52% dividend yield, based on Friday’s closing stock price of $31.02. The stock has technical support in the $26-$28 price area. If the shares can firm up, we see overhead resistance around the $35 price level.

Both D.R. Horton, Inc. (DHI) and Lennar Corporation (LEN) are currently rated “Neutral” by Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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