MTH Should I Buy
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Meritage Homes Corp (MTH) is not a strong buy at the moment for a beginner investor with a long-term strategy. While the technical indicators show some bullish trends, the company's financial performance has significantly declined, and the analyst sentiment is mixed with recent downgrades and reduced price targets. Additionally, the options data suggests a neutral to slightly bearish sentiment. Given the investor's preference for long-term investments, it would be prudent to wait for stronger financial performance or clearer positive catalysts before committing funds.
The stock shows bullish moving averages (SMA_5 > SMA_20 > SMA_200), and the MACD is positive, indicating a potential upward trend. However, RSI is neutral at 62.007, and the stock is currently trading near its resistance level (R1: 78.811). This suggests limited immediate upside potential.
Hedge funds are significantly increasing their holdings (+123.32% last quarter), and the U.S. housing shortage reported by Goldman Sachs could support long-term demand for homebuilders.
The company's financial performance has deteriorated significantly in Q4 2025, with revenue, net income, EPS, and gross margin all showing substantial YoY declines. Analysts have recently downgraded the stock and reduced price targets, citing challenges in the homebuilding environment and valuation concerns.
In Q4 2025, Meritage Homes reported a revenue decline of -11.47% YoY, net income dropped by -51.33% YoY, EPS fell by -49.15% YoY, and gross margin decreased by -44.44% YoY. This indicates significant financial headwinds.
Analysts are mixed on the stock. Recent downgrades and reduced price targets reflect concerns about the challenging homebuilding environment, while some analysts still see potential upside due to the company's valuation and market position.
