UBS Raises PulteGroup Price Target to $150 Amid Strong Q2 Performance

UBS has raised its price target for PulteGroup (PHM) from $141 to $150 and maintained a Buy rating. The increase follows PulteGroup's strong Q2 performance, despite market volatility. The company achieved impressive earnings, with net income of $608 million and a gross margin of 27.0%. PulteGroup also reported a 2% increase in average sales price and a backlog of 10,779 homes valued at $6.8 billion.

PulteGroup Inc. (PHM) reported its second quarter 2025 financial results on July 22, 2025, with strong earnings despite a challenging housing market. The nation’s third-largest homebuilder reported a 4% decline in revenue, yet maintained a disciplined business approach and continued its share repurchase program. The stock was up 3.08% in premarket trading following the presentation, indicating investor confidence despite the mixed results [1].

The company’s net income for the quarter was $608 million, or $3.03 per share, a 25% decrease from the $809 million reported in Q2 2024. Home sale revenues decreased 4% to $4.3 billion, while closings for the quarter declined 6% to 7,639 homes compared to the prior year [1].

The average sales price increased modestly by 2% to $559,000, helping to partially offset the impact of lower closing volume. However, gross margins compressed significantly, falling 290 basis points year-over-year to 27.0%, primarily due to higher incentives, which rose to 8.7% from 6.3% in the prior year [1].

PulteGroup continues to execute its land strategy focused on optioning rather than ownership, aiming to reduce capital intensity and risk. The company ended Q2 with approximately 250,000 lots under control and invested $1.3 billion in land acquisition and development during the quarter, with 51% of spending directed toward the development of existing land assets [1].

Despite the challenging market conditions, PulteGroup maintained its commitment to returning capital to shareholders. In Q2, the company repurchased $300 million of common shares at an average price of $100.54, bringing the year-to-date total to $600 million. The company ended the period with $1.3 billion of cash and a debt-to-capital ratio of 11.4%, down from 11.8% at the end of 2024 [1].

UBS has raised its price target for PulteGroup (PHM) from $141 to $150 and maintained a Buy rating. The increase follows PulteGroup's strong Q2 performance, despite market volatility. The company achieved impressive earnings, with net income of $608 million and a gross margin of 27.0%. PulteGroup also reported a 2% increase in average sales price and a backlog of 10,779 homes valued at $6.8 billion [2].

The company expects margin pressure to continue in the second half of the year, with gross margins projected to be below the 27.0% achieved in Q2. For the third quarter, PulteGroup expects closings of 7,200-7,600 homes with an average sales price of $560,000-$570,000 and gross margins of 26.0%-26.5% [1].

References:
[1] https://www.investing.com/news/company-news/pultegroup-q2-2025-slides-revenue-dips-4-as-housing-market-cools-93CH-4145927
[2] https://www.nasdaq.com/articles/pultegroup-reports-q2-revenue-shortfall