Goldman Sachs Sees 40% Upside For M.D.C. Holdings (MDC)

Goldman Sachs Group analysts Richard Ramsden, Brian Foran, Daniel Harris and Jessica Binder Graham reiterated their Conviction Buy List rating for shares of M.D.C. Holdings Inc (NYSE: MDC), with a price target of $44 per share.

The analysts said they believe Wall Street is significantly underestimating the earnings potential of M.D.C. Holdings Inc and that they see upside potential of 40% for the company's stock.

The Goldman Sachs Group analysts wrote, "we expect strong 2Q results given the positive trends from 1Q earnings: (1) MDC’s above-consensus order growth of +38%, and strong backlog of over 1,200 units (with over 770 spec units) support our expectation for 2Q profitability – MDC’s first since 3Q2006. (2) Operating leverage should be a benefit as MDC’s cost structure is positioned for 2X-3X the current sales pace and improvement in sales via larger land transactions should help drive industry-best operating leverage. (3) MDC’s exposure to newer land and solid underwriting on new parcels position it well and as MDC spends more on land acquisition, we expect it to enhance profitability."