Merrill Lynch Sees Value in Homebuilders

In a new research report from John Lovallo, who covers homebuilders at Merrill Lynch, he makes the case that the industry is on sale as the group was hammered recently over fears of rising interest rates. Lovallo feels that 2018 is lining up well despite the probability of rising rates, and he feels the pullback in the top stocks is providing a huge opportunity, especially for the firm’s top picks:

D.R. Horton:  ML Target:  $71  WS Target:  $56.80  Current:  $44.55
Lennar:  ML Target:  $90  WS Target:  $78  Current:  $59
Pulte:  ML Target: $42  WS Target: $35.75  Current:  $28
Toll Brothers:  ML Target: $60  WS Target:  $64.11  Current:  $43.75