Investing.com -- RBC Capital Markets maintained a cautious outlook on homebuilders for 2025 given the affordability challenges amid high interest rates but noted selective opportunities in building products.
RBC expects housing starts and repair-and-remodel activity to remain flat this year, with macroeconomic factors like tariffs, taxes, and immigration policies adding volatility.
The brokerage prefers less macro-dependent sectors, favouring companies like Owens Corning (NYSE:OC), Beacon Roofing Supply (NASDAQ:BECN), and Azek Corp, which are all rated "outperform."
RBC upgraded homebuilders KB Home (NYSE:KBH) and Lennar Corp (NYSE:LEN) to "sector perform" but maintained "underperform" ratings on D.R. Horton, Whirlpool (NYSE:WHR), and Installed Building Products (NYSE:IBP).
On KBH rating the brokerage said “our upgrade ahead of next week’s results is valuation-based and not a call on the quarter, as we expect results/guide to come in weak on both orders and margins, following LEN’s earlier miss and pricing weakness”
"Valuations still aren't attractive given the frothy starting point,” analyst said, but added that the sentiment has turned more balanced improving risk/reward
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