24/7 Wall St. » PHM

24/7 Wall St. Closing Bell — Tuesday: Markets Mixed at Open, Closes Slightly Higher

Paul Ausick — Tue, 30 Apr 2013 20:06:01 +0000

U.S. equity markets opened mixed this morning as investors weighed conflicting data from the U.S., Europe, and Asia. In Europe, retail sales declined more than expected in Germany, Italy’s unemployment rate remained unchanged at 11.5%, and eurozone inflation moderated to 1.2%, below a forecast for inflation of 1.6%. In Asia, Japanese industrial production rose less than expected, retail unexpectedly fell, and unemployment came in below expectations. In the U.S., the S&P Case-Shiller housing price index rose more than expected (more coverage here), while the Chicago PMI came in well below expectations and chilled investors for a spell this morning (more coverage here). The latest U.S. consumer confidence index came in higher than expected, which put some heat back into the morning trading session (more coverage here).

The U.S. dollar index is trading down 0.47% today, now at 81.762. The GSCI commodity index is up 1.2% at 629.99. WTI crude oil closed down 1.1%, at $93.46 a barrel, down 3.9% for the month of April. Brent crude trades down 1.6% at $102.19 a barrel. Natural gas is down 0.4% today at about $4.15 per million BTUs. Gold settled up 0.3% today at $1,472.10 an ounce, but lost 7.8% for the month, the largest drop in 16 months.

The unofficial closing bells put the DJIA up more than 20 points to 14,839.18 (0.14%), the NASDAQ rose nearly 22 points (0.66%) to 3,328.79, and the S&P 500 rose 0.24% or nearly 4 points to 1,597.45.

There were a several analyst upgrades and downgrades today, including Pandora Media Inc. (NYSE: P) initiated as ‘sector perform’ at RBC Capital Markets; Buffalo Wild Wings Inc. (NASDAQ: BWLD) cut to ‘hold’ at KeyBanc; Best Buy Co. Inc. (NYSE: BBY) raised to ‘buy’ at Deutsche Bank (more coverage here); PulteGroup Inc. (NYSE: PHM) cut to ‘neutral’ at J.P. Morgan; and SINA Corp. (NASDAQ: SINA) raised to ‘buy’ at Jefferies.

Earnings reports since markets closed last night resulted in some price moves today, including these as of the last half hour of trading: Embraer SA (NYSE: ERJ) is up 6.7% at $34.94; Express Scripts Holding Co. (NASDAQ: ESRX) is up 1.6% at $59.38; General Growth Properties Inc. (NYSE: GGP) is up 2.2% at $22.50 after posting a new 52-week high of $22.80 earlier today; Herbalife Ltd. (NYSE: HLF) is up 2.7% at $39.78 (more coverage here); Hertz Global Holdings Inc. (NYSE: HTZ) is up 0.2% at $24.03 after posting a new 52-week high of $24.79 earlier today; Newmont Mining Corp. (NYSE: NEM) is down 5% at $32.27 after posting a new 52-week low of $31.33 earlier today; Riverbed Technology Inc. (NASDAQ: RVBD) is up fractionally at $14.86; 3D Systems Corp. (NYSE: DDD) is up 7.3% at $38.39; Aetna Inc. (NYSE: AET) is up 2.5% at $57.55 after posting a new 52-week high of $58.63 earlier today; Anheuser-Busch InBev SA (NYSE: BUD) is up 0.3% at $95.72; Avon Products Inc. (NYSE: AVP) is up 4.5% at $23.23 after posting a new 52-week high of $24.30 earlier today; BP plc (NYSE: BP) is up 2.3% at $43.61 (more coverage here); Harvest Natural Resources Inc. (NYSE: HNR) is down 5.5% at $3.25; Marathon Petroleum Corp. (NYSE: MPC) is down 4.9% at $78.39; Office Depot Inc. (NYSE: ODP) is up 4.9% at $3.88; United States Steel Corp. (NYSE: X) is up 0.3% at $17.59; and Valero Energy Corp. (NYSE: VLO) is down 2.5% at $40.17 (more coverage here).

Before markets open tomorrow morning we are scheduled to hear earnings reports from Affymetrix Inc. (NASDAQ: AFFX), Bankrate Inc. (NYSE: RATE), Leap Wireless International Inc. (NASDAQ: LEAP), Spectrum Brands Holdings Inc. (NYSE: SPB), Trulia Inc. (NASDAQ: TRLA), Vanguard Health Systems Inc. (NYSE: VHS), ADT Corp. (NYSE: ADT), Chesapeake Energy Corp. (NYSE: CHK), Comcast Corp. (NASDAQ: CMCSA), Humana Inc. (NYSE: HUM), James River Coal Co. (NASDAQ: JRCC), Mastercard Inc. (NYSE: MA), and Viacom Corp. (NASDAQ: VIAB).

Some standouts among heavily traded stocks today include:

Sirius XM Radio Inc. (NASDAQ: SIRI) is up 5.5% at $3.24 after posting a new 52-week high of $3.25 earlier today. The satellite radio company posted good numbers and made permanent the hire of interim CEO James Meyer.

Delcath Systems Inc. (NASDAQ: DCTH) is down 39.8% at $0.84. The pharmaceutical and medical device maker will have to repeat a clinical trial.

Pitney Bowes Inc. (NYSE: PBI) is down 16.6% at $13.52. The business equipment company had a 57% drop in profits and cut its dividend.

Stay tuned for Wednesday. The Federal Open Market Committee (FOMC) concludes a two-day meeting. We have also noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
8:15 a.m. – ADP employment report
8:58 a.m. – PMI manufacturing index
10:00 a.m. – ISM manufacturing index
10:00 a.m. – Construction spending
10:30 a.m. – EIA weekly petroleum status report
2:00 p.m. – FOMC meeting announcement

Filed under: 24/7 Wall St. Wire, HI/LOW, Market Close Tagged: ADT, AET, AFFX, AVP, BBY, BP, BUD, BWLD, CHK, CMCSA, DCTH, DDD, ESRX, GGP, HLF, HNR, HTZ, HUM, JRCC, LEAP, MA, MPC, NEM, ODP, P, PBI, PHM, RATE, RVBD, SINA, SIRI, SPB, TRLA, VHS, VIA-B, VLO, X

Top 10 Analyst Upgrades and Downgrades: Best Buy, Pulte and More

Jon C. Ogg — Tue, 30 Apr 2013 12:15:29 +0000

Investors and traders are usually on the lookout for new research ideas that will generate higher income or more profits. 24/7 Wall St. reviews many analyst research calls from Wall Street and from boutique firms to find great ideas in value stocks, growth stocks and dividend stocks. Some are stocks to buy, while some ideas are even stocks to sell. These are 10 of the top analyst upgrades, downgrade, and initiations from select Wall Street research calls this Tuesday.

Best Buy Co. Inc. (NYSE: BBY) was raised to Buy from Hold at Deutsche Bank.

Boardwalk Pipeline Partners L.P. (NYSE: BWP) was raised to Neutral from Underperform at Credit Suisse.

Buffalo Wild Wings Inc. (NASDAQ: BWLD) was downgraded to Hold from Buy at KeyBanc.

CenterPoint Energy Inc. (NYSE: CNP) was initiated with a Buy rating at KeyBanc.

Deutsche Bank A.G. (NYSE: DB) was raised to Neutral from Underperform at Credit Suisse and raised to Overweight from Neutral at J.P. Morgan.

Pandora Media Inc. (NYSE: P) was initiated with a Sector Perform rating at RBC Capital Markets.

PulteGroup Inc. (NYSE: PHM) was downgraded to Neutral from Overweight at J.P. Morgan.

Rosetta Resources Inc. (NASDAQ: ROSE) was reinstated as Outperform with a $62 price target at Credit Suisse.

SINA Corp. (NASDAQ: SINA) was raised to Buy from Hold at Jefferies.

Superior Energy Services Inc. (NYSE: SPN) was raised to Buy from Hold at Stern Agee.

Jefferies identified its top oil and gas stocks to buy amid the recent turmoil.

Filed under: Active Trader, Analyst Calls, Value Investing Tagged: BBY, BWLD, BWP, CNP, DB, P, PHM, ROSE, SINA, SPN

Sterne Agee Pounds Table as Home Builders Continue to Show Strength (TOL, PHM, MTH, DHI, BZH, HD, LOW, MTG, GNW, WFC)

Lee Jackson — Thu, 14 Mar 2013 13:45:51 +0000

The home building industry may have been left for dead after the mortgage debacle and recession of 2008, but it continues to help lead markets higher and heal a very anemic economy. Because of the vast array of products, components and material needed for the construction of single family and multifamily homes, multiple segments of the American economy are benefiting. In research reports out today, regional brokerage firm Sterne Agee joins a growing list of Wall St. firms that are bullish on the home builders.

Acknowledging today in their initiation of coverage on the sector that all builders are not created equal, the team at Sterne Agee starts four names with Buy ratings, two at Neutral and upscale home builder Toll Brothers (NYSE: TOL) at Underperform. They cite two specific areas of concern in their coverage about the home building industry as a whole: the potential for mortgage rates to rise from current historic lows and the very strict mortgage underwriting standards lenders are using. The following are the home building stocks to buy according to Sterne Agee.

PulteGroup Inc. (NYSE: PHM) has a Sterne Agee price target of $24, the Thomson/First Call consensus target of $23.

Meritage Homes Corp. (NYSE: MTH) is a California and Texas builder, initiated today with a price target of $49. The Wall St. estimate is $47.

D.R. Horton Inc. (NYSE: DHI) makes the buy list and has a $29 price target. The Wall St. consensus estimate is $25.50.

Beazer Homes USA Inc. (NYSE: BZH), with operations in 16 states, fills out the list at Sterne Agee, with a $21 price target. The consensus estimate is $15. This is a contrarian call to say the least.

The economic boost because of the wide range of products and material needed for construction is having a definite trickle down effect. Suppliers and home improvement companies are big beneficiaries of the building boom. The Home Depot (NYSE: HD) and competitor Lowe’s Companies Inc. (NYSE: LOW) are at the top of most Wall St. stocks-to-buy lists, and both are trading near 52-week highs.

They are not the only companies to benefit from the resurgence in home building. The mortgage insurance industry has seen a strong uptick in business. Once left for dead, both MGIC Investment Corp (NYSE: MTG) and Genworth Financial Inc. (NYSE: GNW) have fought their way back. In fact, many top “low price” stock lists tout both of these names.

In addition, the damage in the mortgage industry made many money center banks flee the business of providing and servicing mortgages. This has opened the door for Wells Fargo & Co. (NYSE: WFC) to become a leading provider of home loans, often buying loans from builders in less than 30 days from closing.

Sector leadership drives our economy. The home building sector, with its vast need for labor, materials and services, is helping to revive an economy it once helped to drag down. Investors need to stay focused on earning reports from homebuilders. Once things begin to soften, it may be time to exit.

Filed under: Activist Investor, Analyst Calls, Housing Tagged: BZH, DHI, featured, GNW, HD, LOW, MTG, MTH, PHM, TOL, WFC

Deutsche Bank Raises Price Targets on Homebuilders — Time to Tap the Brakes? (DB, BCS, DHI, MDC, MTH, RYL, PHM, XHB)

Lee Jackson — Wed, 06 Feb 2013 14:25:24 +0000

We have written at great length about the resurgence of homebuilding in the United States. Like any other sector, if you go long enough without production, demand catches up with supply. Doomsday scenario forecasters in recent years were saying that the American dream of owning a home is over. Demand has caught up with the lack of supply, and while the homebuilding sector is on fire, some Wall St. firms are starting to become more cautious.

The analysts at Deutsche Bank A.G. (NYSE: DB) are the most recent on Wall St. to raise price targets on their Buy-rated homebuilding stocks. For the past 12 to 15 months, they contend that investors have been squarely focused on gross margins as the most important differentiating factor among builders. This was driven by the belief that home prices were set to rise more than was commonly expected. Gross margins remain a primary focus; however, there has been a distinct shift after builders released their fourth-quarter results, when investors began to focus more on growth potential as well. Gross margin trends have begun to converge, and with investor expectations so high, margins alone are not enough to drive earnings.

Investor expectations are indeed high, and a contrast is starting to emerge as just yesterday Barclays PLC (NYSE: BCS) downgraded four homebuilder stocks from Overweight to Neutral. They still like the sector but are cautious after big stock price moves. So the question for investors starts to become one of valuation. The question also becomes one of determining where the builders are in the cycle.

Overall most of the builders reported positive results this quarter. The Deutsche Bank research shows that 70% of the builders beat expectations while only 20% were in line and just 10% missed expectations. The builders generally performed well in gross margins, which is of tantamount importance to investors after strong stock performance. And 90% of the builders showed upside on gross margins in their fourth quarter results. Order growth also was generally strong this past quarter, with a median of 35% year-over-year growth, which is higher than consensus forecasted 29% growth. 90% of the builders were
either in line or above consensus on order growth.

Deutsche Bank raised their price targets on four stocks that it rates with Buy ratings and one rated Neutral. Top pick D.R. Horton Inc. (NYSE: DHI) has its price target raised from $22 to $25. The Wall St. consensus price target is also $25. MDC Holdings Inc. (NYSE: MDC) is rated Buy and its price target goes from $44 to $45, and the consensus target is $39.25. Meritage Homes Corp. (NYSE: MTH) jumps from $42 to $46 with a Buy rating. The Thomson/First call estimate is $44. The last Buy-rated name, Ryland Group Inc. (NYSE: RYL), has its price target raised to $42 from $38. The consensus target is $40. Neutral-rated PulteGroup Inc. (NYSE: PHM) is upped from $15 to $17, and the consensus is $20.

Mortgage rates that continue to be at historical lows, combined with an economy that appears to be slowly but surely improving, should continue to provide a tailwind for the industry. After almost three years since hitting their lows in March of 2009, the homebuilding stocks have been one of Wall St.’s top-performing sectors. The challenge for investors at this point is not only choosing the right name, but picking the right entry point. One good way to add the sector to a well-rounded portfolio is to buy the SPDR S&P Homebuilders ETF (NYSEMKT: XHB). This adds diversification by offering a basket of the top stocks in the sector.

Filed under: 24/7 Wall St. Wire, Analyst Calls, Housing Tagged: BCS, DB, DHI, MDC, MTH, PHM, RYL, XHB

Top Analyst Upgrades and Downgrades (BIDU, BBVA, BBBY, CIT, CLWR, DHI, HMY, HGG, KBH, M, MRVL, PHM, RYL, SD, SWC, TGT, TOL, UNH, WSM, ZNGA)

Jon C. Ogg — Tue, 05 Feb 2013 13:25:16 +0000

These are some of this Tuesday’s top analyst upgrades, downgrades and initiations seen from Wall St. research calls.

Baidu Inc. (NASDAQ: BIDU) cut to Market Perform at Raymond James and cut to Hold at Stifel Nicolaus.

Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA) raised to Neutral at UBS.

Bed Bath & Beyond Inc. (NASDAQ: BBBY) raised to Buy at Citigroup.

CIT Group Inc. (NYSE: CIT) cut to Neutral at Nomura.

Clearwire Corp. (NASDAQ: CLWR) cut to Underperform at D.A. Davidson.

D.R. Horton Inc. (NYSE: DHI) raised to overweight at Barclays.

Harmony Gold Mining Co. Ltd. (NYSE: HMY) raised to Neutral at Citigroup.

hhgregg Inc. (NYSE: HGG) cut to Underperform at Credit Suisse.

KB Home (NYSE: KBH) cut to Equal Weight at Barclays.

Macy’s Inc. (NYSE: M) raised to Buy at Citigroup.

Marvell Technology Group Ltd. (NASDAQ: MRVL) raised to Outperform at RBC.

PulteGroup Inc. (NYSE: PHM) cut to Equal Weight at Barclays.

Ryland Group Inc. (NYSE: RYL) cut to Underweight at Barclays.

SandRidge Energy Inc. (NYSE: SD) cut to Underweight at J.P. Morgan.

Stillwater Mining Co. (NYSE: SWC) raised to Overweight at J.P. Morgan.

Target Corp. (NYSE: TGT) raised to Buy at Citigroup.

Toll Brothers Inc. (NYSE: TOL) cut to Underweight at Barclays.

UnitedHealth Group Inc. (NYSE: UNH) raised to Conviction Buy List at Goldman Sachs.

Williams-Sonoma Inc. (NYSE: WSM) started as Neutral at Credit Suisse.

Zynga Inc. (NASDAQ: ZNGA) raised to Buy at BofA/Merrill Lynch (FULL SUMMARY).

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: BBBY, BBVA, BIDU, CIT, CLWR, DHI, HGG, HMY, KBH, M, MRVL, PHM, RYL, SD, SWC, TGT, TOL, UNH, WSM, ZNGA

24/7 Wall St. Closing Bell — January 31, 2013: Markets Slip Again (HES, STX, QCOMM, FIO, CMA, CTXS, COP, EA, FB, JDSU, LVS, AET, MO, AN, CL, DNKN, MA, PHM, TWC, UPS, BYI, GDOT, WYNN, CVX, XOM, MAT, MRK, NOV, TSN, RIMM, WMS, SGMS, STZ)

Paul Ausick — Thu, 31 Jan 2013 21:17:51 +0000

U.S. equity markets opened lower this morning following a mixed bag of data on the U.S. economy and mixed earnings results out this morning. In Europe, Germany’s retail sales fell sharply this month, but the unemployment rate improved to 6.8% (more coverage here). U.K. housing prices rose 0.5% in the month, while French consumer spending was unchanged and the country’s producer price index fell. In Asia, Japanese PMI rose. In the U.S., new claims for unemployment benefits rose more than expected, as did personal income and employment costs (more coverage here). Yesterday’s sell-off really got global markets off on the wrong today.

The U.S. dollar index fell 0.1% today, now at 79.208. The GSCI commodity index is up 0.8% at 675.95, with commodities prices mixed today. WTI crude oil closed down 0.5% today, at $97.49 a barrel, but up 6.1% for the best January since 2006 (if you’re an oil trader). Brent crude trades up 0.5% at $115.52 a barrel. Natural gas is up 0.2% today at about $3.34 per million BTUs following a smaller-than-expected draw on stocks (more coverage here). Gold settled down 1.2% today at $1,662.00 an ounce, down 0.8% for the month of January and the fourth consecutive monthly loss for the yellow metal (more gold coverage here).

The unofficial closing bells put the DJIA down nearly 50 points to 13,860.58 (-0.36%), the NASDAQ fell less than 1 point (-0.01%) to 3,142.13, and the S&P 500 fel -0.26% or nearly 4 points to 1,498.11.

There were a several analyst upgrades and downgrades today, including Hess Corp. (NYSE: HES) cut to ‘neutral’ at UBS and cut to ‘hold’ at SocGen; Seagate Technology PLC (NASDAQ: STX) cut to ‘underweight’ at Barclays; Qualcomm Inc. (NASDAQ: QCOM) reiterated as ‘buy’ and price target raised to $83 at Canaccord Genuity; Fusion-io Inc. (NYSE: FIO) raised to ‘buy’ at Lazard, cut to ‘neutral’ at J.P. Morgan and Credit Suisse; and Comerica Inc. (NYSE: CMA) cut to ‘underperform’ at Bernstein.

Earnings reports since markets closed last night resulted in several price moves today, including these: Citrix Systems Inc. (NASDAQ: CTXS) is up 9.8% at $73.54; ConocoPhillips (NYSE: COP) is down 4.7% at $58.21 (more oil company coverage here); Electronic Arts Inc. (NASDAQ: EA) is up 4.3% at $15.74; Facebook Inc. (NASDAQ: FB) is up 0.4% at $31.37 (more coverage here); JDS Uniphase Corp. (NASDAQ: JDSU) is up 17.7% at $14.59; Las Vegas Sands Corp. (NYSE: LVS) is up 6.7% at $54.99 (more coverage here); Aetna Inc. (NYSE: AET) is down 1.3% at $48.31; Altria Group Inc. (NYSE: MO) is up 0.1% at $33.72 (more coverage here); AutoNation Inc. (NYSE: AN) is up 8.3% at $48.46; Colgate-Palmolive Co. (NYSE: CL) is down 2.9% at $107.63; Dunkin’ Brands Group Inc. (NASDAQ: DNKN) is up 2% at $36.51 after posting a new 52-week high of $40.00 earlier today; Mastercard Inc. (NYSE: MA) is up 0.3% at $517.41 after posting a new 52-week high of $535.35 earlier today; PulteGroup Inc. (NYSE: PHM) is down 1.9% at $20.66 (more coverage here); Time Warner Cable Inc. (NYSE: TWC) is down 12.1% at $88.55; and United Parcel Service Inc. (NYSE: UPS) is down 2% at $79.57 (more coverage here).

After markets close today and before they open tomorrow morning we are scheduled to hear from Bally Technologies Inc. (NYSE: BYI), Green Dot Corp. (NASDAQ: GDOT), Wynn Resorts Ltd. (NASDAQ: WYNN), Chevron Corp. (NYSE: CVX), Exxon Mobil Corp. (NYSE: XOM), Mattel Inc. (NYSE: MAT), Merck & Co. Inc. (NYSE: MRK), National Oilwell Varco Inc. (NYSE: NOV), and Tyson Foods Inc. (NYSE: TSN).

Some standouts from today include the following stocks:

Research in Motion Ltd. (NASDAQ: RIMM) is down 5.1% at $13.08. The smartphone maker changed its name to BlackBerry and launched two new smartphones yesterday, and got a slew of analysts’ downgrades this morning. More coverage here.

WMS Industries Inc. (NYSE: WMS) is up 51.3% at $24.77 after posting a new 52-week high of $25.30 earlier today. The gambling machine maker is being acquired by Scientific Games Corp. (NASDAQ: SGMS) for about $1.5 billion, or $26 a share, in cash.

Constellation Brands Inc. (NYSE: STZ) is down 19.1% at $31.68. The alcoholic beverage maker is collateral damage in a DoJ decision to axe Anheuser-Busch InBev SA’s (NYSE: BUD) acquisition of Mexico’s Grupo Modelo. More coverage here.

Stay tuned for Friday. Auto sales will be reported throughout the day. New York Fed President William Dudley is giving a speech. We have also noted the following events on the schedule (all times Eastern):

8:30 a.m. – Employment situation
8:58 a.m. – PMI manufacturing index
9:55 a.m. – University of Michigan/Thomson Reuters consumer sentiment index
10:00 a.m. – Institute for Supply Management manufacturing index
10:00 a.m. – Construction spending

Filed under: 24/7 Wall St. Wire, HI/LOW, Market Close Tagged: AET, AN, BYI, CL, CMA, COP, CTXS, CVX, DNKN, EA, FB, featured, FIO, GDOT, HES, JDSU, LVS, MA, MAT, MO, MRK, NOV, PHM, QCOMM, RIMM, SGMS, STX, STZ, TSN, TWC, UPS, WMS, WYNN, XOM

PulteGroup Sinking Following Big Miss on Earnings

Paul Ausick — Thu, 31 Jan 2013 12:55:19 +0000

PulteGroup Inc. (NYSE: PHM) reported fourth-quarter and full-year 2012 results before markets opened this morning. For the quarter, the homebuilder posted diluted earnings per share (EPS) of $0.15 on revenues of $1.57 billion. In the same period a year ago, the company reported adjusted EPS of $0.04 on revenues of $1.26 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for $0.31 EPS and $1.55 billion in revenues.

For the full year, PulteGroup posted adjusted EPS of $0.54 on revenues of $4.82 billion, compared with an EPS loss of $0.55 on revenues of $4.14 billion in 2011. The consensus estimate called for EPS of $0.68 on revenues of $4.75 billion.

PulteGroup noted that EPS included charges totaling $0.19 related to future loan repurchase obligations and a fourth-quarter senior note repurchase.

The company’s CEO said:

We now look ahead to 2013 with expectations for a continued rebound in U.S. housing driven by record low interest rates, higher rent vs. own costs, rising home prices and sharply lower overall housing inventory. Given this expectation, and consistent with our focus on improving long-term returns, we have authorized an additional $250 million per year of investment in land and related development in 2013 and 2014.

The company did not offer guidance, but the consensus estimate for the current quarter calls for EPS of $0.15 on revenues of $1.15 billion. For the full year, the consensus estimate calls for EPS of $1.13 on revenues of $6.14 billion.

The company’s shares are down 3.8% in premarket trading at $20.25 in a 52-week range of $7.42 to $21.97. Thomson Reuters had a consensus analyst price target of around $19.40 before today’s report.

Filed under: 24/7 Wall St. Wire, Earnings, Housing Tagged: PHM

24/7 Wall St. Closing Bell — January 30, 2013: Markets Slide on GDP, Fed Stimulus (WBSN, JBLU, KBH, YUM, CSCO, AMZN, BRCM, RYL, RHI, BA, ADT, LLL, PSX, NOC, SO, CTXS, COP, EA, FB, JDSU, LVS, AET, MO, AN, CL, DNKN, MA, PHM, TWC, UPS, RIMM, CHK, VTUS)

Paul Ausick — Wed, 30 Jan 2013 21:06:34 +0000

U.S. equity markets opened mixed this morning following a depressing report on U.S. GDP growth, which turned out to be negative (more coverage here). Even a good jobs report from ADP couldn’t overcome the story on GDP. In Europe, Spain’s prime minister said that changing the country’s deficit targets would send the wrong message, as if the country’s decline in GDP growth and record high unemployment hasn’t already telegraphed the message (more coverage here). In Asia markets rose when a Japan expert suggested that the country’s central bank could double its asset purchase program to reach the 2% inflation target. Afternoon trading slid to new lows following the FOMC announcement that interest rates would remain unchanged (more coverage here).

The U.S. dollar index fell 0.4% today, now at 79.235. The GSCI commodity index is up 0.8% at 670.51, with commodities prices mostly higher again today. WTI crude oil closed up 0.4% today, at $97.94 a barrel following a sharp increase in crude oil inventories today (more coverage here). Brent crude trades up 0.5% at $114.93 a barrel. Natural gas is up 2.3% today at about $3.23 per million BTUs. Gold settled up 0.5% today at $1,681.60 an ounce.

The unofficial closing bells put the DJIA down 44 points to 13,910.42 (-0.32%), the NASDAQ fell more than 11 points (-0.36%) to 3,142.31, and the S&P 500 fell -0.39% or nearly 6 points to 1,501.96.

There were a several analyst upgrades and downgrades today, including Websense Inc. (NASDAQ: WBSN) cut to ‘sell’ at Topeka Capital; JetBlue Airways Corp. (NASDAQ: JBLU) cut to ‘underperform’ at Raymond James; KB Home (NYSE: KBH) raised to ‘outperform’ at Credit Suisse; Yum! Brands Inc. (NYSE: YUM) cut to ‘market perform’ at Bernstein; and Cisco Systems Inc. (NASDAQ: CSCO) raised to ‘outperform’ at Baird.

Earnings reports since markets closed last night resulted in several price moves today, including these: Amazon.com Inc. (NASDAQ: AMZN) is up 4.4% at $271.84 after posting a new 52-week high of $284.79 earlier today (more coverage here); Broadcom Corp. (NASDAQ: BRCM) is up 0.2% at $33.76 (more coverage here); Ryland Group Inc. (NYSE: RYL) is down 2.6% at $40.24 after putting up a new 52-week high of $42.79 earlier today; Robert Half International Inc. (NYSE: RHI) is up 5.7% at $35.45 after posting a new 52-week high of $35.72 earlier today; The Boeing Co. (NYSE: BA) is up 1.1% at $74.42 (more coverage here); The ADT Corp. (NYSE: ADT) is up 3.6% at $48.17 after posting a new 52-week high of $49.16 earlier today; L-3 Communications Holdings Inc. (NYSE: LLL) is up 0.1% at $77.96; Phillips 66 (NYSE: PSX) is up 1.6% at $60.83 after posting a second consecutive 52-week high of $62.91 earlier today (more coverage here); Northrop Grumman Corp. (NYSE: NOC) is down 0.5% at $66.43 (more coverage here); and Southern Co. (NYSE: SO) is down 0.1% at $44.56.

After markets close today and before they open tomorrow morning we are scheduled to hear from Citrix Systems Inc. (NASDAQ: CTXS), ConocoPhillips (NYSE: COP), Electronic Arts Inc. (NASDAQ: EA), Facebook Inc. (NASDAQ: FB), JDS Uniphase Corp. (NASDAQ: JDSU), Las Vegas Sands Corp. (NYSE: LVS), Aetna Inc. (NYSE: AET), Altria Group Inc. (NYSE: MO), AutoNation Inc. (NYSE: AN), Colgate-Palmolive Co. (NYSE: CL), Dunkin’ Brands Group Inc. (NASDAQ: DNKN), Mastercard Inc. (NYSE: MA), PulteGroup Inc. (NYSE: PHM), Time Warner Cable Inc. (NYSE: TWC), and United Parcel Service Inc. (NYSE: UPS).

Some standouts from today include the following stocks:

Research in Motion Ltd. (NASDAQ: RIMM) is down 10.3% at $14.04. The smartphone maker changed its name to BlackBerry and launched two new smartphones today. More coverage here.

Chesapeake Energy Corp. (NYSE: CHK) is up 6.5% at $20.20. The natural gas producer lost its CEO last night — or did the board fire him? More coverage here.

Ventrus Biosciences Inc. (NASDAQ: VTUS) is down 22.9% at $2.53. The development stage pharmaceutical firm priced a secondary offering of 5.8 million shares at $2.50 a share, a discount of 24% to last night’s closing price.

Stay tuned for Thursday. We have noted the following event on the schedule (all times Eastern):

7:30 a.m. – Challenger job-cut report
8:30 a.m. – New claims for unemployment benefits
8:30 a.m. – Personal income and outlays
8:30 a.m. – Employment cost index
9:45 a.m. – Chicago PMI
10:30 a.m. – EIA weekly natural gas storage report
3:00 p.m. – Farm prices
4:30 p.m. – Fed balance sheet and money supply

Filed under: 24/7 Wall St. Wire, HI/LOW, Market Close Tagged: ADT, AET, AMZN, AN, BA, BRCM, CHK, CL, COP, CSCO, CTXS, DNKN, EA, FB, JBLU, JDSU, KBH, LLL, LVS, MA, MO, NOC, PHM, PSX, RHI, RIMM, RYL, SO, TWC, UPS, VTUS, WBSN, YUM

Compass Point Boldly Upgrades Homebuilders to Buy (KBH, LEN, SPF, RYL, BZH, PHM)

Lee Jackson — Tue, 29 Jan 2013 14:45:10 +0000

We have written at great length about the resurgence of homebuilding in the United States. Like any other sector, if you go long enough without production, demand catches up with supply. Doomsday scenario forecasters in recent years were saying that the American dream of owning a home is over. Yet, demand has caught up with the lack of supply and the homebuilding sector is on fire.

Based in Washington, D.C., boutique broker-dealer Compass Point specializes in mortgage finance, real estate and real estate investment trusts (REITs), homebuilders and specialty finance. For most firms on Wall St., homebuilding is just another sector they follow. At Compass Point it is the main focus. Today the firm upgraded three names to Buy and raised price targets on three others. Here are the three raised to Buy:

KB Home Inc. (NYSE: KBH) was raised to Buy after an impressive common equity and convertible notes offering. Compass Point does not believe its prior concerns regarding KB Homes liquidity position are warranted. Furthermore, while issues with homebuilding margin still exist, the dramatic rise in fourth-quarter 2012 average selling price (ASP) suggests that KB is successfully executing on its mix shift strategy and selling more expensive homes to move-up buyers and high-quality first-time buyers. The upgrade rating and price target increase reflects belief that KB Home will continue to improve its earnings power and reduce leverage, though the company still has work to do to fully shift its product offering up the price point scale and away from first-time home buyers. KB Home is trading near $18.60, and the Wall St. consensus price target is only $15.

Lennar Corp. (NYSE: LEN) was upgraded to Buy from Neutral at Compass Point, which also raised its target to $49.50. The firm notes it is increasingly bullish on Lennar’s homebuilding prospects, and while it does not believe the company’s newly announced multifamily initiatives will add material value to the stock in the near term, the analyst views management’s efforts on this front as further attempts by the company to diversify the income stream, hedge its housing bets and capitalize on what likely will be a side-by-side housing recovery with multifamily. Compass Point thinks the current stock price represents one of the better buying opportunities in the space, particularly given current high valuation levels. Lennar is trading near $42, compared to a consensus target of $41.

Standard Pacific Corp. (NYSE: SPF) was upgraded to Buy from Neutral, and the price target was raised to $10.25 from $7.25. The firm noted that the past several quarters have provided increased clarity into Standard Pacific’s earnings power, the extent of the housing recovery and the high expectations for growth embedded in current valuation levels. Compass Point stated that the firm operates in markets that have been the primary beneficiaries of the housing rebound in 2012, and it caters to higher average selling prices and buyers that are less affected by tight mortgage credit, rather than lower price-point buyers and first-time home buyers. Standard Pacific is above $8 a share, which is above the Wall St. consensus of $7.23.

Compass Point also raised their price target on Ryland Group Inc. (NYSE: RYL) from $38 to $46.50. The Thomson/First Call estimate is $40. Beazer Homes USA Inc. (NYSE: BZH) was raised from $11 to $15, which is below Beazer’s $19 per share. The Wall St. consensus is $15.63. Compass Point also increased its target on PulteGroup Inc. (NYSE: PHM) from $21 to $27. The consensus target is $20.

One key thing for investors to note here is that Compass Point’s price targets are now at or above almost all the consensus numbers. The firm is truly making a call and saying we are still in the early stages of the homebuilding rebound. This is the kind of call people looking to invest in homebuilding stocks may want to heed.

Filed under: 24/7 Wall St. Wire, Analyst Calls, Housing Tagged: BZH, KBH, LEN, PHM, RYL, SPF

Homebuilders and Housing Tank into Fiscal Cliff

Jon C. Ogg — Fri, 21 Dec 2012 14:56:40 +0000

The resolution for the fiscal cliff remains elusive. The politicians hate each other too much to be rational. If one sector has a lot to lose as the country drives off of the fiscal cliff in a “Thelma & Louise” fashion, it is the housing sector. Shares homebuilders are down but the sector around retail and insuring mortgages is also down. Here is how some of the key homebuilders are doing themselves:

D.R. Horton Inc. (NYSE: DHI) is down 2.3% at $19.65 against a 52-week range of $12.06 to $22.79.

KB Home (NYSE: KBH) is down 3.6% at $15.03 against a 52-week range of $6.17 to $17.30.

Lennar Corp. (NYSE: LEN) is down 2.6% at $38.27 against a 52-week range of $18.83 to $39.88.

PulteGroup Inc. (NYSE: PHM) is down 2.6% at $18.00 against a 52-week range of $5.88 to $18.86.

Toll Brothers Inc. (NYSE: TOL) is down 2.8% at $31.41 against a 52-week range of $19.63 to $37.08.

We are also seeing an impact in the retailers tied to home improvements:

Home Depot Inc. (NYSE: HD) is down 1.5% at $61.05 against a 52-week range of $41.52 to $65.92, and Lowe’s Companies Inc. (NYSE: LOW) is down 1.2% at $34.96 against a 52-week range of $24.76 to $36.47.

MGIC Investment Corp. (NYSE: MTG), a home mortgage insurer, is down almost 3% at $2.33 against a 52-week range of $0.66 to $5.15. Radian Group Inc. (NYSE: RDN) is down by 2.5% at $5.19 against a 52-week range of $2.00 to $5.55.

The SPDR S&P Homebuilders (NYSEMKT: XHB) is down 1.6% at $26.35, but this is 1% higher than the lows after the open.

Another Christmas present from Washington D.C.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Economy, Housing Tagged: DHI, HD, KBH, LEN, LOW, MTG, PHM, RDN, TOL, XHB