Homebuilding stock Lennar is one of the best-positioned names to capitalize on a housing market trough next year, according to Barclays. Analyst Matthew Bouley upgraded the homebuilder to overweight from equal weight, saying in a note to clients Wednesday that Lennar’s size and past history of solid execution should help it navigate this environment. “We view LEN as a consistent executor on all fronts, and we see more relative upside for LEN as we enter a period where builder valuations are positioned to outperform,” he wrote. “We think LEN deserves a premium given expectations for above-peer book value growth over the next few years.” While near-term price reductions will weigh on the company’s gross margins and average selling price per unit, they should help Lennar drive better share gains versus the market longer term. “As the second largest homebuilder by closings in the US, we expect LEN will leverage its scale to more effectively manage its gross margins relative to peers, allowing the company to increase its incentives with a relatively better ability to reduce construction costs in tandem,” he wrote. Barclays’ upped its price target on Lennar to $116 from $85 a share, suggesting the stock’s poised to rally 28% from Tuesday’s close. Shares are down 22% this year, but gained more than 1% in the premarket Wednesday following the upgrade. Across the board, Bouley views many housing stocks as better situated for a solid 2023 and poised to benefit from the possibility of interest rates peaking. Some balance sheet concerns, he added, also look less problematic, given how the market’s absorbed high mortgage rates and inventory issues. “Altogether, despite a highly pressured housing environment with challenging signs everywhere, we do not think there is much left that can surprise to the downside, and we expect a trough in 2023,” he said. Bouley also upgraded shares of PulteGroup to an overweight rating, saying that the stock offers a “best-in-class” return on equity that isn’t reflected in its valuation. Shares are down about 20% this year, with the revised $58 price target suggesting a roughly 27% upside from Tuesday’s close. — CNBC’s Michael Bloom contributed reporting