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UPDATE: Compass Point Upgrades Beazer Homes USA As Stock Warrants Investor Attention

Dwight Einhorn

In a report published Friday, Compass Point analyst Wilkes Graham upgraded the rating on Beazer Homes USA (NYSE: BZH) from Neutral to Buy, and raised the price target from $24.00 to $25.00.

In the report, Compass Point noted, “We are upgrading BZH to Buy from Neutral and raising our price target to $25.00 from $24.00. Even with BZH's post-earnings +4% move in the stock, the Company is still down 20% YTD despite another quarter of solid progress in its "2B-10" plan including an EBITDA guidance increase. We believe that BZH's continued progress towards its multi-year plan to reach $2B in revenue and 10% EBITDA margins will trump any overhang in the stock that might be attributed to risks associated with the company's exposure to first-time homebuyers.

"Furthermore, with BZH currently trading well under book (73% of our 2015 tangible book estimate of $27.08, including about $13/share in DTA), we believe the stock is very cheap relative to its peers and warrants investor attention.”

Beazer Homes USA closed on Thursday at $19.80.

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