UPDATE: J.P. Morgan Initiates William Lyon Homes at Neutral on in Line Upside Potential

In a report published on Tuesday, J.P. Morgan analyst Michael Rehaut initiated coverage on William Lyon Homes (NYSE: WLH) with a Neutral rating and a price target of $31.

In the report, J.P. Morgan stated, "Overall, we view WLH as well positioned within our universe from a geographic standpoint, with long land positions in the attractive markets of Southern CA, Northern CA and Phoenix. As such, while our 2013 and 2014 gross margin estimates are in-line with our universe, we believe above average upside potential exists given the strong price appreciation that should continue in WLH's core markets. Also, we anticipate material order growth acceleration in 2014. Lastly, we believe valuation, at 15%-20% premiums to its smaller-cap peers on both an adj. P/B basis and against our 2016 Earnings Power, fairly reflects WLH's attractive geographic exposure as well as its longer land positions which support our outlook for material order growth acceleration in 2014."

William Lyon Homes closed on Monday at $23.85.