On Monday, Piper Sandler reaffirmed its Overweight rating on Howard Hughes Holdings (NYSE:NYSE:HHH), maintaining a $105.00 price target. The firm highlighted the company's unique Master Planned Communities (MPC) business model as a significant strength. According to Piper Sandler, the increase in mortgage rates post-election has paradoxically benefited Howard Hughes, as it has led to a surge in demand for new homes due to a slowdown in existing home sales.
The analyst pointed out that while historically Howard Hughes has seen annual land sales of over $200 million, with more than $300 million considered unsustainable, the company is now set to achieve this higher sales figure. This shift is attributed not to an increase in the amount of land sold, but to inflation and a reduced housing stock, which has raised the price per acre to approximately $1 million, as revealed in the third quarter of 2024.
Piper Sandler's commentary further emphasized that Howard Hughes is in an advantageous position to showcase the profitability of its business model, especially as it continues to sell land, increasing the value of its remaining acreage.
Although Howard Hughes management did not comment on the potential acquisition bid by Pershing Square (NYSE:SQ), the analyst believes that the company's current trajectory underscores its value proposition and the effectiveness of its business strategy.
InvestingPro Insights
Recent data from InvestingPro adds weight to Piper Sandler's bullish outlook on Howard Hughes Holdings (NYSE:HHH). The company's revenue growth of 10.91% over the last twelve months, coupled with a robust quarterly revenue growth of 43.19% in Q3 2024, aligns with the analyst's positive view on increased land sales and pricing.
InvestingPro Tips highlight that HHH is "trading near its 52-week high" and has seen a "large price uptick over the last six months." This market performance reflects the strong demand for new homes and the company's successful land sales strategy mentioned in the article. Additionally, the tip that "analysts anticipate sales growth in the current year" further supports Piper Sandler's expectations for Howard Hughes' business model.
For investors seeking a deeper understanding of Howard Hughes Holdings' financial health and market position, InvestingPro offers 6 additional tips, providing a comprehensive analysis to inform investment decisions.
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