Overview
Keefe, Bruyette & Woods reduced its price target on D.R. Horton (NYSE: DHI) to $163.00 from $168.00 and retained a Market Perform rating on the shares. The change came after the homebuilder released its first-quarter fiscal 2026 results, which presented a mixed operational and financial picture.
Quarterly performance highlights
D.R. Horton reported first-quarter results showing orders rising 2.6% year-over-year while home closings fell 6.5% versus the same period a year earlier. Over the past twelve months the company’s revenue has declined by 8.62%, though the stock continues to trade at a price-to-earnings ratio of 13.59.
The company posted a gross margin of 20.4% for the quarter, a figure that included a 40 basis point benefit from warranty items. Excluding that warranty benefit, the gross margin stood at 20.0%.
For the second quarter D.R. Horton guided gross margins to a range between 19.0% and 19.5%, noting affordability challenges within the housing market as a factor in its outlook.
Analyst margin projections and multi-year view
KBW adjusted its own forecast for D.R. Horton’s margins, projecting gross margins in the 19.25% to 19.8% range for the remainder of 2026, with an expected improvement to 20.25% in 2027.
Earnings and analyst reactions
On the earnings front, D.R. Horton reported first-quarter fiscal 2026 earnings per share of $2.03, beating the consensus estimate of $1.93. Evercore ISI noted an adjusted diluted EPS of $2.06, which exceeded Evercore’s internal projection of $2.05.
Analysts responded unevenly to the results. UBS raised its price target for D.R. Horton to $193 and maintained a Buy rating while adjusting earnings forecasts for future years. Bank of America Securities lowered its price target to $158, explicitly citing margin concerns despite the earnings beat. Evercore ISI adjusted its price target to $169 and kept an "In Line" rating. These moves underscore divergent views among firms following the quarter.
What this means for investors and the sector
The company’s quarter combined an earnings beat with signs of revenue contraction and margin compression, yielding a nuanced outlook from the analyst community. Investors and market participants in the homebuilding and residential construction sectors are left weighing the impact of affordability headwinds and near-term margin pressure against the company’s earnings performance.
Summary
KBW cut its price target to $163 while keeping a Market Perform rating after D.R. Horton posted a mixed first-quarter set of results: modest order growth, weaker closings, a decline in trailing-year revenue, and margin guidance that points to continued pressure. Analysts’ responses to the results were mixed, with several firms updating price targets and ratings in both directions.