J.P. Morgan analyst, Michael Rehaut, predicts that stocks related to new home construction will outperform those tied to existing housing renovations. While renovation activity remains stagnant, residential housing rebound and steady single-family ho...
According to J.P. Morgan, stocks tied to new home construction are set to outperform those related to existing housing renovations. In a recent report, Michael Rehaut, an analyst specializing in home-building and building products, outlined the diverging performance of these two markets.
While the residential housing market is experiencing a rebound, repair and remodeling activity remains stagnant. Indicators, such as declining sales of existing single-family homes, suggest a decreased demand for renovations. In contrast, new single-family housing starts have been steady, averaging an annual rate of 1 million, which is close to historical averages.
Considering these dynamics, Rehaut downgraded Stanley Black & Decker from Hold to Sell. Conversely, he upgraded TopBuild and Installed Building Products from Hold to Buy.
Rehaut's price target for Stanley stock remained unchanged at $89 per share. In early trading, Stanley stock saw a 4.7% increase to $101.07 per share. Meanwhile, the S&P 500 and Dow Jones Industrial Average were both up around 0.4%.
Rehaut raised his price target for TopBuild from $312 to $387 per share, with the stock seeing an 8.1% increase to $359.47 per share. Additionally, his price target for Installed Building Products rose to $199 from $167, as the shares climbed 7.1% to $178.76.
Currently, less than 20% of analysts covering Stanley stock rate it as a Buy, while the average Buy-rating ratio for S&P 500 stocks is approximately 55%. The average analyst price target for Stanley stock is about $95 per share.
On the other hand, the Buy-rating ratios for TopBuild and Installed Building Products stand at 67% and 50% respectively. Analysts' average price targets for TopBuild and Installed Building Products are around $327 and $162 per share, respectively.
Notably, both price targets are below the current trading levels of the stocks. TopBuild stock has outperformed expectations, surging approximately 113% year-to-date, while Installed Building Products shares have gained about 95%.
Rehaut remains optimistic about the future performance of these stocks.
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