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Research Alert: CFRA Moves To Hold From Sell On Shares Of Taylor Morrison Homes Corporation

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

Berkshire Hathaway announced the acquisition of TMHC for $72.50/share in cash, a 24% premium to the May 29 closing price. Prior to the announcement, TMHC was trading near our $57 price target. We view the acquisition as a validation of the long-term fundamentals in the homebuilding industry. However, we think the move also supports our believe that near-term performance will remain choppy, with homebuilders possessing large balance sheets and diversified consumer bases better positioned to navigate headwinds. We see the acquisition as a diversification effort, especially as the transaction signals a departure from Berkshire's strategy of allowing acquisitions to operate independently. CEO Greg Abel indicated plans to unify operations with Berkshire's housing assets, including Clayton Homes. We note Clayton is more exposed to entry level, while TMHC's product portfolio is more diverse. Our 12-month price of $72 is 11.5x our 2027 EPS of $6.26, a premium to the 7.2x 10-year mean. Our EPS estimates remain unchanged.

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