Citi ups PulteGroup target to $90, opens ‘positive catalyst watch’

Citi raised the firm’s price target on PulteGroup to $90 from $75 and keeps a Buy rating on the shares. The analyst also opened a “30-day positive catalyst watch” on the shares into the Q2 report. PulteGroup is Citi’s top homebuilders pick given its “industry leading” gross margin and return on equity. The firm expects upside in Q2 to net orders, deliveries and gross margin. It updated estimates to reflect stronger May and June demand and an improved margin outlook due to stronger prices and decelerating costs. There are two “powerful secular tailwinds” that should allow homebuilders to meaningfully beat national housing data: new home sales are gaining share from existing home sales and large public builders are gaining share from smaller private builders, says Citi.