NEW YORK (TheStreet) -- Shares of D.R. Horton (DHI) - Get D.R. Horton, Inc. Report are down 1.44% to $24.03 after Citigroup downgraded the company to "neutral" from "buy," while raising its price target to $26 from $25.
"We downgrade DHI to neutral as the shares appear near fair value, as implied by our $26 target price. Our target price is based on 1.6x 2015E TBV of $16 per share," Citigroup said.
"Our target multiple is consistent with the consensus-implied 2015 multiples of the closest peers PulteGroup (PHM) - Get PulteGroup, Inc. Report , Lennar Corp. (LEN) - Get Lennar Corporation Class A Report , and Toll Brothers (TOL) - Get Toll Brothers, Inc. Report , and above the peer median of 1.1x," Citigroup noted.
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Yesterday, D.R. Horton reported fiscal 2015 first quarter pretax income of $221 million on revenue of $2.3 billion, compared to Citigroup's income estimates of $191 million on revenue of $2.1 billion.
Homebuilding gross margin of 19.8% was in line with Citigroup's estimate. Net orders of 7,370 homes, up 35% year-over-year, were "particularly strong," and exceeded consensus of 6,904, and Citigroup forecast of 6,272, analysts added.