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LGI Homes (NASDAQ:LGIH) stock was up ~6% in premarket trade, as Wedbush upgraded the company to Neutral from Underperform, as it is set to benefit from a rebound in monthly sales.
“Our catalysts include the sequential improvement in monthly absorption from July to August, the ~12% pullback from 7/30/24 to 9/6/24 in LGI’s share price, the potentially positive cash flow reversal discussed in this note, and the steady declines in mortgage rates thus far in C3Q24,” the analysts said in a note.
Wedbush added the company should be on course to achieve the brokerage firm’s F3Q24 closing forecast of 1.8k homes, assuming September’s sales absorption and community count are in line with August’s levels.
“We anticipate September’s closings should be released in early October similar to the prior year’s releases,” the analysts said.
Wedbush expects the cash flow trajectory to shift from a net outflow to a net inflow during F4Q24 and F1Q25.
The price target was also raised to $125 from $97.
Shares in the company were down 21.3% since the start of the year.
SA quant and SA analysts rate the company at Hold.
