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S&P raises credit outlook for Meritage Homes

NEW YORK (AP) -- Standard & Poor's Ratings Services raised its outlook on Meritage Homes Corp. Wednesday, saying it expects the homebuilder's credit to improve.

The outlook went to positive from stable. S&P rates Meritage's credit at 'B+', a "junk" grade that is four notches below investment grade. The firm said the company's operations and revenue growth will keep improving as the housing market continues to recover, and Meritage is focused on the Western and Southwestern U.S., where the market is doing particularly well.

Analyst Kenny Tang said higher sales and better prices should lead to better profitability and a greater cash flow for Meritage. That would help reduce its leverage.

Shares of the Scottsdale, Ariz., company rose 46 cents to close at $44.50.