Morgan Stanley starts US homebuilders with 'cautious' view, flags affordability worries
** Morgan Stanley initiates coverage of US homebuilders with a "cautious" industry view
** Affordability, incentives and margin pressure key challenges - brokerage
** MS says affordability concerns keep existing-home sales range-bound, limits resale supply and continues to pressure new housing; lower mortgage rates improve affordability
** Starts Toll Brothers TOL.N with "overweight" rating on an affluent, less rate-sensitive customer base and strong pricing power
** D.R. Horton DHI.N remains vulnerable to affordability pressures among first-time buyers; PulteGroup's PHM.N favorable buyer mix does not translate into stronger EPS growth - Analysts
** Ratings and price targets:
Company name | Rating | PT |
Toll Brothers | Overweight | $159 |
D.R. Horton | Equal weight | $151 |
Pultegroup | Equal weight | $128 |
Lennar Corporation | Underweight | $65 |
KB Home | Underweight | $39 |
NVR Inc | Underweight | $5,058 |