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Top Analyst Upgrades & Downgrades (AXP, ATML, BLK, CVX, CLR, EPR, EQR, FTE, HBC, JNPR, LEN, LECO, MWE, MSFT, OAS, SVU)

Administrator — Thu, 12 Jan 2012 13:29:11 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Thursday morning.

American Express Co. (NYSE: AXP) Reiterated Buy with $60 target at Argus.
Atmel Corporation (NASDAQ: ATML) Maintained Buy but cut target to $11 at Canaccord Genuity.
BlackRock Inc. (NYSE: BLK) Started as Buy at UBS.
Chevron Corporation (NYSE: CVX) Maintained Outperform but cut earnings estimates at Credit Suisse.
Continental Resources (NYSE: CLR) Cut to Hold with $79 target at Canaccord Genuity.
Entertainment Properties Trust (NYSE: EPR) Cut to Neutral at JPMorgan.
Equity Residential (NYSE: EQR) Cut to Neutral at JPMorgan.
France Telecom SA (NYSE: FTE) Cut to Underweight at JPMorgan.
HSBC Holdings PLC (NYSE: HBC) Cut to Underperform at BofA/ML.
Juniper Networks Inc. (NYSE: JNPR) Cut to Hold at Argus.
Lennar Corporation (NYSE: LEN) Cut to Market Perform at KBW.
Lincoln Electric Holdings, Inc. (NASDAQ: LECO) named as Value stock of the day at Zacks.
MarkWest Energy Partners (NYSE: MWE) named as Bull of the Day at Zacks.
Microsoft Corporation (NASDAQ: MSFT) Maintained Outperform but cut target to $34 from $35 at Credit Suisse; Maintained Hold and lowered estimates at Argus.
Oasis Petroleum (NYSE: OAS) Cut to Hold with $32 target at Canaccord Genuity.
SUPERVALU Inc. (NYSE: SVU) Maintained Neutral but cut target to $7 from $10 at Credit Suisse.

JON C. OGG

Filed under: Analyst Calls Tagged: ATML, AXP, BLK, CLR, CVX, EPR, EQR, FTE, HBC, JNPR, LECO, LEN, MSFT, MWE, OAS, SVU

24/7 Wall St. Closing Bell (ALU, WBMD, URBN, RL, AWK, LEN, SVU, SHIP, LEDS, SNX, JASO, YRCW, CROX, HL, HRC)

Paul Ausick — Wed, 11 Jan 2012 21:05:20 +0000

Equities opened modestly down this morning and the three major indexes have stayed within a few points of flat all day. The NASDAQ composite has remained in positive territory as the technology sector has benefited from a sharp buying trend in solar stocks. The EIA’s weekly petroleum report came in with a crude build of 5 million barrels, way above an expected gain of 1 million barrels. The report weighed on energy stocks since mid-morning. The euro has also been weaker today, adding a bit of push to equity buying. Crude oil is ending the day down, with WTI crude down about -1.3% at $100.92/barrel and Brent crude is down 0.64% at $112.55/barrel. Gold closed higher, at $1,640.50/ounce, after posting a four-week high earlier today.

The unofficial closing bells put the DJIA down more than 13 points to 12,449.08 (-0.11%), the NASDAQ rose more than 8 points (0.31%) to 2,710.76, and the S&P 500 rose 0.03% or less than 1 point to 1,292.44.

There were several analyst upgrades and downgrades today, including Alcatel-Lucent, S.A. (NYSE: ALU) raised to ‘buy’ at Deutsche Bank; WebMD Health Corp. (NASDAQ: WBMD) cut to ‘market perform’ at Wells Fargo; Urban Outfitters Inc. (NASDAQ: URBN) cut to ‘sell’ at Citigroup; Ralph Lauren Corp. (NYSE: RL) cut to ‘market perform’ at Wells Fargo; and American Water Works Co. Inc. (NYSE: AWK) raised to ‘buy’ at Ladenburg Thalmann.

Earnings reports since markets closed yesterday have led to some price changes: Lennar Corp. (NYSE: LEN) is up 6.3% at $22.07 after posting a new 52-week high of $22.53 earlier today; Supervalu Inc. (NYSE: SVU) is down nearly -13% at $7.33; Seanergy Maritime Holdings Corp. (NASDAQ: SHIP) is up more than 5.5% at $2.65; SemiLEDS Corp. (NASDAQ: LEDS) is more than 5% at $3.69; and Synnex Corp. (NYSE: SNX) is up more than 8% at $34.80.

Other standouts from today include the following stocks:

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up more than 37% at $1.97. The Chinese solar maker is among several Chinese solar companies getting a boost today from news that solar panel prices appear to be stabilizing. We have more coverage here.

YRC Worldwide Inc. (NASDAQ: YRCW) is up nearly 16% at $11.38. The transportation company has said it will auction 62 of its surplus US sites.

Crocs Inc. (NASDAQ: CROX) is up more than 17% at $18.73. The funny-shoe company has estimated that sales in the current fiscal year will top $1 billion for the first time.

Hecla Mining Co. (NYSE: HL) is down about -22% at $4.55, after posting a new 52-week low of $4.25 earlier today. The silver miner has lowered its production estimate due to a forced closure of a shaft at its Nevada mine.

Hill-Rom Holdings Inc. (NYSE: HRC) is down nearly -12% at $30.45. The medical equipment maker and services provider lowered fourth-quarter and full-year guidance last night.

Stay tuned for Thursday. Here are the noteworthy events on the schedule (all times Eastern):

8:30 a.m. – Initial unemployment benefits claims report
8:30 a.m. – Census Bureau retail sales report
10:00 a.m. – Census Bureau business inventories report
10:30 a.m. – EIA weekly natural gas status report
1:00 p.m. – 30-year bond auction
2:00 p.m. – US Treasury budget
4:30 p.m. – Federal Reserve balance sheet

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: ALU, AWK, CROX, HL, HRC, JASO, LEDS, LEN, RL, SHIP, SNX, SVU, URBN, WBMD, YRCW

24/7 Wall St. Closing Bell (INTC, NFLX, SBUX, DIS, M, AA, ELX, BSDM, SNX, LEN, SVU, WBMD, GNOM, IDIX, TIF, LIZ)

Paul Ausick — Tue, 10 Jan 2012 21:07:07 +0000

US equities opened strongly this morning and managed to maintain solid gains throughout the day. The in-line earnings report last night from Alcoa Inc. (NYSE: AA) and higher commodity prices — based on a weaker dollar — led markets higher in the morning. The S&P 500 posted a new five-month high just before noon today. Today’s auction of 3-year Treasuries was strong, with the highest demand for dollars since May 2010. Volumes were not as heavy as might have been expected though. Crude oil is higher today, with WTI up 0.88% at $102.20/barrel and Brent up 0.64% at $113.17/barrel. Gold is also up more than $26, at $1,634.50.

The unofficial closing bells put the DJIA up nearly 70 points to 12,462.47 (0.56%), the NASDAQ rose nearly 26 points (0.97%) to 2,702.50, and the S&P 500 rose 0.89% or more than 11 points to 1,292.08.

There were several analyst upgrades and downgrades today, including Intel Corp. (NASDAQ: INTC) maintained as ‘top tech/semiconductor’ pick at Credit Suisse; Netflix Inc. (NASDAQ: NFLX) cut from ‘neutral’ to ‘underperform’ at BofA/ML; Starbucks Corp. (NASDAQ: SBUX) reiterated as ‘buy’ and estimates raised at Argus; The Walt Disney Co. (NYSE: DIS) cut to ‘equal-weight’ at Barclays; and Macy’s Inc. (NYSE: M) reiterated as ‘outperform’ and price target raised from $32 to $36 at Credit Suisse.

Earnings reports of note since markets closed yesterday include: Alcoa is up 0.27% at $9.45; Emulex Corp. (NYSE: ELX) is up more than 13% at $8.38; and BSD Medical Corp. (NASDAQ: BSDM) is down more than -7% at $2.09. After markets close today Synnex Corp. (NYSE: SNX) reports earnings and tomorrow’s earnings schedule includes Lennar Corp. (NYSE: LEN) and Supervalu Inc. (NYSE: SVU).

Other standouts from today include the following stocks:

WebMD Health Corp. (NASDAQ: WBMD) is down more than -28% at $26.41, after posting a new 52-week low of $25.01 earlier today. The web-based healthcare company’s CEO resigned, the search for an acquirer was terminated, and the revenue outlook for 2012 was lowered.

Complete Genomics Inc. (NASDAQ: GNOM) is down nearly -26% at $2.88. The biotechnology company shipped fewer genomes than expected in the fourth quarter.

Idenix Pharmaceuticals Inc. (NASDAQ: IDIX) is up more than 25% at $12.10, a new 52-week high. The drug maker continues to bask in the reflected glow of yesterday’s takeover of Inhibitex Inc. (NASDAQ: INHX) by Bristol Myers Squibb (NYSE: BMY).

Tiffany & Co. (NYSE: TIF) is down more than -10% at $59.97. The company reported weak earnings and a lower forecast this morning.

Liz Claiborne Inc. (NYSE: LIZ) is down more than -13% at $8.63. The clothing company’s CFO resigned and the company lowered 2012 revenue estimates.

Stay tuned for Wednesday. Chicago Fed President Charles Evans, Atlanta Fed President Dennis Lockhart, and Philadelphia Fed President Charles Plosser are giving speeches. Here are the noteworthy events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
10:30 a.m. – EIA weekly petroleum status report
1:00 p.m. – 10-year Treasury note auction
2:00 p.m. – Federal Reserve Beige Book released

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: AA, BSDM, DIS, ELX, GNOM, IDIX, INTC, LEN, LIZ, M, NFLX, SBUX, SNX, SVU, TIF, WBMD

Case-Shiller Report… Housing Pain Remains (KBH, DHI, TOL, LEN, PHM)

Paul Ausick — Tue, 27 Dec 2011 15:14:19 +0000

The monthly S&P/Case-Shiller Home Price Indices for the month of October were released this morning, and the results failed to meet already low expectation. The annual decline in home prices in the 10- and 20- metropolitan regions measured by the indices fell -3.0% and -3.4%, respectively. A median forecast had predicted a drop of -3.2% in the 20-city index. For just the month of October, home prices fell in both indices by more than -1% compared with September prices.

Recent earnings and forecasts from builders like KB Home (NYSE: KBH), D.R. Horton Inc. (NYSE: DHI), Toll Brothers Inc. (NYSE: TOL), Lennar Corp. (NYSE: LEN), and PulteGroup Inc. (NYSE: PHM) have been mixed, but the trend has been slightly positive for the first time in many quarters.

In the 20-city Case-Shiller index, the one-year decline in Atlanta was worst, at -11.7%, followed by Las Vegas at -8.5% and Minneapolis at -8.4%. The two cities posting one year price gains in October were Detroit, up 2.5%, and Washington, D.C., up 1.3%.

Only one city, Phoenix, posted a month-over-month gain in October, and that gain was a mere 0.3%. The largest decline month-over-month came in Atlanta, at -5%, with Detroit falling -3.3% in the month.

The Case-Shiller indices indicate a couple of things. First, the impact of foreclosed properties still weighs on home prices. And as more foreclosed properties hit the market now that lenders are ending their self-imposed moratorium on foreclosures, more pressure is expected on home prices.

Second, the recent good news on new orders and inventory levels from home builders could be more transient than many had hoped. Even the expected improvements in homebuilding were slight, and remained near recent lows.

Home prices have returned to their level in mid-2003, and the 20-city recovery from its most recent low in March 2011 is up 1.9%. That’s barely better than nothing.

Paul Ausick

Filed under: Economy, Housing Tagged: DHI, KBH, LEN, PHM, TOL

24/7 Wall St. Closing Bell (INTC, BA, AZO, DD, EPB, LEN, TOL, BRN, DMND, VMC, OXGN, HBP, PNCL, ROSE, NBG)

Paul Ausick — Mon, 12 Dec 2011 21:06:28 +0000

US equity markets opened sharply lower this morning and continued falling before levelling off at around 200 pts down on the DJIA. The downturn followed closer examination of the European Union’s agreement last week which traders hoped would put an end to the debt crisis in Europe. That turned out not to be the case, however, with both Moody’s and Fitch Ratings expressing doubts about the permanence of the deal. An announcement of lowered guidance from Intel Corp. (NASDAQ: INTC) weighed on the tech sector. WTI crude oil is trading at $97.94/barrel shortly before today’s close, down about -1.5%, and gold is up about 1.85% at $1,744.50.

The unofficial closing bells put the DJIA down more than 162 points to 12,021.77 (-1.33%), the NASDAQ fell more than 34 points (-1.31%) to 2,612.26, and the S&P 500 fell nearly -1.5% or more than 18 points to 1,236.48.

There were several analyst upgrades and downgrades today, including Boeing Co. (NYSE: BA) raised to overweight with an $82 target price at Morgan Stanley. Other ratings actions today include AutoZone Inc. (NYSE: AZO) maintained as ‘buy’ with a $381 target price at Argus, E.I. du Pont de Nemours & Co. (NYSE: DD) cut to ‘neutral’ at Citigroup; El Paso Pipeline Partners L.P. (NYSE: ELB) started as ‘overweight’ at JPMorgan; Lennar Corp. (NYSE: LEN) and Toll Brothers, Inc. (NYSE: TOL) cut to ‘hold’ at KeyBanc.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Barnwell Industries Inc. (AMEX: BRN) is down about -2.8% at $3.09. There were no other earnings report of note today.

Other standouts from today include the following stocks:

Diamond Foods Inc. (NASDAQ: DMND) is down more than -22% at $31.45. The snack food company faces more questions about its accounting. See our coverage for more details.

Vulcan Materials Co. (NYSE: VMC) is up more than 15% at $38.84. The construction materials company received an unsolicited takeover bid from competitor Martin Marietta Materials Inc. (NYSE: MLM).

Oxigene, Inc. (NASDAQ: OXGN) is up nearly 20% at $1.21. The biopharmaceutical company has signed an agreement with a Danish pharmaceutical firm to provide one of Oxigene’s cancer drugs in Europe.

Helix Biopharma Corp. (AMEX: HBP) is down nearly -13% at $1.36. The cancer drug development company has appointed a special committee and engaged an outside auditing firm to investigate claims of unauthorized “representations and assurances” made by certain shareholders to European shareholders who purchased the company’s shares in a private placement.

Pinnacle Airlines Corp. (NASDAQ: PNCL) is down nearly -16% at 1.17, after posting a new 52-week low of $1.08 earlier today. The regional airlines is initiating a program to cut costs and raise cash, and shares were downgraded today at Dahlman Rose from ‘hold’ to ‘sell’ with a target price of $0.75.

Rosetta Resources Inc. (NASDAQ: ROSE) is down -11% at $45.00. The oil & gas exploration & production company experienced disappointing results from two wells in northern Montana.

National Bank of Greece SA (NYSE: NBG) is down more than -15% at $2.03, after posting a new 52-week low of $2.01 earlier today. The bank is the victim of the lack of enthusiasm that developed over the weekend for the Eurozone agreement.

Stay tuned for Tuesday. Here are some noteworthy events on the schedule (all times Eastern):

7:30 a.m. – NFIB small business optimism index
8:30 a.m. – Retail sales
10:00 a.m. – Business inventories
2:15 p.m. – Federal Reserve open market committee meeting announcement.

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AZO, BA, BRN, DD, DMND, EPB, HBP, INTC, LEN, NBG, OXGN, PNCL, ROSE, TOL, VMC

Top Analyst Upgrades & Downgrades (ALTR, AZO, BWP, BA, BYI, EPB, DD, EW, KND, LEN, LLTC, PCS, PLL, PNM, PSB, SAP, TOL)

Administrator — Mon, 12 Dec 2011 13:28:23 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Monday morning.

Altera Corporation (NASDAQ: ALTR) Raised to Outperform at BMO Capital Markets.
AutoZone Inc. (NYSE: AZO) Maintained as Buy with a price target of $381 by Argus.
Boardwalk Pipeline Partners, LP (NYSE: BWP) Started as Neutral at JPMorgan.
Boeing Co. (NYSE: BA) Raised to Overweight with $82 price target at Morgan Stanley.
Bally Technologies, Inc. (NYSE: BYI) Raised to Overweight at JPMorgan.
El Paso Pipeline Partners, L.P. (NYSE: EPB) Started as Overweight at JPMorgan.
E I DuPont de Nemours & Co. (NYSE: DD), or DuPont, Cut to Neutral at Citigroup; Lowered estimates for DuPont at Credit Suisse.
Edwards Lifesciences Corp. (NYSE: EW) Raised to Buy with $75 target at Canaccord Genuity.
Kindred Healthcare, Inc. (NYSE: KND) is already a strong buy but was named as the value stock of the day by Zacks Investment Research.
Lennar Corporation (NYSE: LEN) Cut to Hold at KeyBanc.
Linear Technology (NASDAQ: LLTC) Reiterated Underperform and named Bear of the Day by Zacks Investment Research.
MetroPCS Communications, Inc. (NYSE: PCS) Started as Outperform at Credit Suisse.
Pall Corporation (NYSE: PLL) on Focus List and raised price target to $68 at Credit Suisse.
PNM Resources, Inc. (NYSE: PNM) Cut to Market Perform at Wells Fargo.
PS Business Parks (NYSE: PSB) reiterated Outperform and named as Bull of the Day at Zacks.
SAP AG (NYSE: SAP) Reiterated Buy with $84 price target objective by Argus.
Toll Brothers (NYSE: TOL) Cut to Hold at KeyBanc.

If you want to receive the full 24/7 Wall St. 2012 Model Dividend Portfolio you can sign up in the email submission below. Each morning we send our free email list subscribers a snapshot of the key feature stories, the top daily analyst upgrades and downgrades, previews for key events, and many other aspects governing your finances.

JON C. OGG

Filed under: Analyst Calls Tagged: ALTR, AZO, BA, BWP, BYI, DD, EPB, EW, KND, LEN, LLTC, PCS, PLL, PNM, PSB, SAP, TOL

24/7 Wall St. Closing Bell (HPQ, KO, LEN, PEP, CREE, ANN, CPWM, HNZ, CRMT, CRM, BONT, CF, MOS, FSCI, CLWR, MTOR, MRVL)

Paul Ausick — Fri, 18 Nov 2011 21:09:39 +0000

Stocks got off on a positive note this morning, but resisted the temptation to climb based on a positive reading of the leading econonmic indicators and higher estimates of US GDP growth in the fourth quarter. Consumer spending appears to be higher than expected and retailers’ inventories are falling which should lead to some re-stocking before the holiday shopping season kicks in with real force. Crude oil prices have fallen about -1.4% today, to below $97.50/barrel. Volume has been reasonably heavy as today brings the expiration of options. Gold prices are up a bit at $1,725.80. See our earlier story on the countries that own the world’s gold.

The unofficial closing bells put the DJIA up more than 25 points to 11,796.23 (0.22%), the NASDAQ fell more than 15 points (-0.60%) to 2,572.50, and the S&P 500 fell 0.04% or about 0.48 points to 1,215.65.

There were several analyst upgrades and downgrades today, including Hewlett-Packard Co. (NYSE: HPQ), which was raised to ‘buy’ at Sterne Agee. Other action included The Coca-Cola Co. (NYSE: KO) started as ‘buy’ at Jefferies; Lennar Corp. (NYSE: LEN) cut to ‘neutral’ at Citigroup; Pepsico Inc. (NYSE: PEP) started as ‘hold’ at Jefferies; and Cree Inc. (NASDAQ: CREE) started as ‘buy’ at Goldman Sachs.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Ann Inc. (NYSE: ANN) is down more than -6.6%, at $23.63; Cost Plus Inc. (NASDAQ: CPWM) is up more than 3%, at $7.88; H.J. Heinz Co. (NYSE: HNZ) is down more than -3%, at $51.06; America’s Car Mart, Inc. (NASDAQ: CRMT) is up more than 10%, at $35.84; Salesforce.com (NYSE: CRM) is down more than -10.5%, at $112.67; and The Bon-Ton Stores, Inc. (NASDAQ: BONT) is down more than -8%, at $2.84, after posting a new 52-week low of $2.70 earlier today.

Several other standouts from today are as follows…

CF Industries Holdings, Inc. (NYSE: CF) is up about 2.9%, at $152.46. The company’s stock got pounded yesterday on news that the corn prices fell, but are recovering a bit today as investors remember that falling corn prices don’t necessarily mean that less corn will be planted and, thus, less fertilizer will be used.

The Mosaic Co. (NYSE: MOS) is up more than 4.6%, at $53.12. Another fertilizer maker that got slammed yesterday and is recovering somewhat today.

Fisher Communications Inc. (NASDAQ: FSCI) is up about 12.7%, at $29.20. The broadcast TV station operator has sold its Fisher Plaza building in Seattle for $160 million in cash to Hines Global REIT, Inc.

Clearwire Corp. (NASDAQ: CLWR) is down nearly -21%, at $1.47. The company is reported to be considering skipping a $237 million debt payment due in two weeks, raising fears that the wireless broadband provider could end up in bankruptcy.

Meritor, Inc. (NYSE: MTOR) is down about -9.7%, at $5.12, after posting a new 52-week low of $5.11 earlier in the day. Shares lost -17% earlier this week when the company lowered its guidance for 2012 and the stock was downgraded today from ‘buy’ to ‘hold’ at KeyBanc.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is up more than ;6.8%, at $14.70. The chip maker reported so-so earnings yesterday, but strong positive statements by analysts at FBR and Citi have turned broken eggs into an omelette.

Stay tuned for Monday. Atlanta Federal Reserve Bank president Dennis Lockhart is speaking in Brazil. Here’s a list of other noteworthy events (all times Eastern):

8:30 a.m. – Chicago Federal Reserve Bank national activity index
10:00 a.m. – National Association of Retailers existing home sales report

Have a great weekend.

Paul Ausick

Filed under: Analyst Calls, HI/LOW, Market Close Tagged: ANN, BONT, CF, CLWR, CPWM, CREE, CRM, CRMT, FSCI, HNZ, HPQ, KO, LEN, MOS, MRVL, MTOR, PEP

Top Analyst Upgrades & Downgrades (NLY, ARUN, COG, KO, CREE, DRI, HPQ, HMC, LEN, PEP, KWR, SFD, VECO)

Administrator — Fri, 18 Nov 2011 13:15:03 +0000

These are some of Friday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls.

Annaly Capital Management, Inc. (NYSE: NLY) Cut to Market Perform at KBW.
Aruba Networks, Inc. (NASDAQ: ARUN) Raised to Buy at Janney.
Cabot Oil & Gas Corporation (NYSE: COG) named Bull of the Day at Zacks.
The Coca-Cola Company (NYSE: KO) Started as Buy at Jefferies.
Cree Inc. (NASDAQ: CREE) Started as Buy at Goldman Sachs.
Darden Restaurants, Inc. (NYSE: DRI) Cut to Equal-Weight at Morgan Stanley.
Hewlett-Packard Co. (NYSE: HPQ) Raised to Buy at Stern Agee.
Honda Motor Company (NYSE: HMC) named Bear of the Day at Zacks.
Lennar Corporation (NYSE: LEN) Cut to Neutral at Citigroup.
Pepsico Inc. (NYSE: PEP) Started as Hold at Jefferies.
Quaker Chemical Corporation (NYSE: KWR) named Value stock of the day at Zacks.
Smithfield Foods Inc. (NYSE: SFD) Raised to Outperform at Credit Suisse.
Veeco Instruments Inc. (NASDAQ: VECO) Started as Neutral at Goldman Sachs.

JON C. OGG

Filed under: Analyst Calls Tagged: ARUN, COG, CREE, DRI, HMC, HPQ, KO, KWR, LEN, NLY, PEP, SFD, VECO

Mortgage Applications Fall Again (KBH, LEN, PHM, DHI, BZH, XHB)

Paul Ausick — Wed, 16 Nov 2011 14:45:07 +0000

Mortgage interest rates remain historically low, but buyers are either unwilling or unable to take advantage of the low rates. After three straight weeks of increases in mortgage applications, borrowers backed off last week. This spells more trouble for homebuilders.

According to the Mortgage Bankers Association, the number of mortgage applications fell by -10% last week. Of that total, there were -2.3% fewer applications for new purchases and -12% fewer applications for refinancing. Refinancing accounted for 77.3% of all mortgage applications last week, down from 78.6% in the previous week, which might be slightly better news for new home builders if the total number of applications for new homes had increased.

As it is, builders like KB Home (NYSE: KBH), Lennar Corp. (NYSE: LEN), PulteGroup, Inc. (NYSE: PHM), D.R. Horton, Inc. (NYSE: DHI), and Beazer Homes USA Inc. (NYSE: BZH) will continue to face the dual headwinds of higher inventory at lower prices and hard-to-get credit for new home buyers. The expected spate of foreclosed properties soon to hit the market is also expected to make matters even worse for the builders.

Home sales are reviving a bit in some markets, as we noted our story on the cities where people want to buy homes. All are in sunbelt cities where underwater mortgages and foreclosures have kept prices low, and where many Americans may be looking for a place to retire. One interesting side note to the uptick in home sales in these cities is that buyers may be making all-cash purchases, and foregoing the whole mortgage application process.

About 30% of US homes sold every month are purchased by all-cash buyers. Nearly 20% of buyers are investors who plan either to rent the property or to flip it as soon as possible. It’s probably no surprise that nearly all these all-cash deals are made on foreclosed or distressed properties. According to the National Association of Realtors, about 30% of all sales in September involved foreclosed or distressed properties.

Another interesting note on mortgages is the rise in 15-year refinancing loans. Last month, 28.8% of all mortgages were of that type. At existing low interest rates, homeowners wanting to stay where they are may be able to refinance and end up paying less per month on a 15-year loan than they are currently paying on a 30-year loan. That assumes, of course, that the homeowner can get approved for the loan.

In September, about 18% of all mortgage applications failed to get approval. Part of the problem has been a lowering of loan limits by lenders, which raises the cost to buyers in areas of expensive homes where buyers need to get a more expensive jumbo mortgage that exceeds $417,000.

The SPDR S&P Homebuilders ETF (NYSE: XHB) is up nearly 2% over the past 12 months, although it has dropped about -1.5% in the first few minutes of trading this morning. The individual homebuilders shares are down anywhere from -1% to -2.25% in early trading as well.

Paul Ausick

Filed under: Housing, Personal Finance Tagged: BZH, DHI, KBH, LEN, PHM, XHB

Homebuilder Profitable Again (DHI, PHM, LEN, TOL, KBH, HD, LOW)

Paul Ausick — Fri, 11 Nov 2011 15:05:54 +0000

The collapse of the US housing market has been among the most stubborn problems facing the US economy for the past four years. Construction jobs have vanished, home values have plummeted, and buyers are scarce, even while mortgage rates sink below 4%. It’s a bit of a surprise, then, to see a homebuilder report a pretty solid quarter even if it fell a little short of expectations. The big question, of course, is does this signal the beginning of a recovery in housing?

D.R. Horton, Inc. (NYSE: DHI) reported fourth fiscal quarter EPS of $0.11 on revenue of $1.1 billion this morning, short of the consensus EPS estimate of $0.14, but in-line with the revenue estimate. For the company’s full fiscal year, EPS came in at $0.23 on revenue of $3.5 billion. For 2010, Horton posted EPS of $0.77 on revenue of $4.3 billion. That hardly looks like the start of a recovery. Other homebuilders like PulteGroup, Inc. (NYSE: PHM), Lennar Corp. (NYSE: LEN), Toll Brothers Inc. (NYSE: TOL), and KB Home (NYSE: KBH) have posted, at best mixed results. Even home improvement giants like Home Depot, Inc. (NYSE: HD) and Lowe’s Companies (NYSE: LOW) have been mixed.

PulteGroup posted an EPS loss of -$0.34 in its quarter ended in September, but is expected to post EPS of $0.06 for the December quarter. Lennar beat EPS expectations by a penny in its August quarter and Toll Brothers crushed expectations by posting EPS of $0.25. For their current quarters, Lennar is expected to report EPS of $0.17 and Toll Brothers is looking for EPS of $0.05. KB Home put up a better-than-expected EPS loss of -$0.13 in its August quarter and is expected to post EPS of $0.02 for its November quarter.

Home Depot reported EPS for its July quarter of $0.86, beating estimates, and is expected to report EPS of $0.58 next Tuesday. Lowe’s also beat estimates in its July quarter and is expected to post EPS of $0.33 when it reports earnings next Monday. Home remodeling got a boost this year, up 29% year-over-year in August, but that number should begin to decline as the remodeling season is now behind us. Lowe’s announced last month that it would close 20 stores and fire about 1,950 employees, costing the company about $0.17-$0.20 in EPS.

In its quarterly report, Horton noted that its sales backlog had grown nearly 18%, from 4,128 new homes in September 2010 to 4,854 this past September. However, the company also said that its cancellation rate for the quarter was 29%. That backlog can hardly be considered safe, especially given that a surge of foreclosed properties for sale is expected to hit the market sometime in the next few months.

In the earnings release, Horton’s chairman said that the company is positioned “for a stronger start to fiscal 2012.” That’s good, but how the company finishes is more important. There are so many headwinds to new homebuilding that it is hard to be too confident that 2012 will be much better than 2011.

Paul Ausick

Filed under: Earnings, Housing Tagged: DHI, HD, KBH, LEN, LOW, PHM, TOL