UBS Starts Coverage of Homebuilders (BZH, CTX, DHI, HOV, KBH, MTH, PHM, RYL, SPF, LEN, LOW)

Douglas A. McIntyre

Lennar posted earnings and as expected these were just ugly.  The loss was $3.25 per share after charges, although this includes charges of $3.33 per share.  Revenues were $2.34 Billion.   Lennar’s home sale revenue fell 44% to $2.2 billion. Cancellation rate was 32%; New orders fell 48% to 5,804 homes.  And if this wasn’t foreseeable, the company will be having more job cuts in the coming quarter.  Lennar shares are indicated down $1.30 to 41.70 at what will be another set of 52-week lows.

UBS has initiated coverage of homebuilders:

  • Beazer (BZH) started as Sell;
  • Centex (CTX) started as Buy;
  • D.R.Horton (DHI) started as Sell;
  • Hovnanian (HOV) started as Neutral;
  • KB Home (KBH) started as Buy;
  • Lennar started as Sell;
  • Meritage (MTH) started as Neutral;
  • Pulte (PHM) started as Sell;
  • Ryland (RYL) started as Neutral;
  • Standard Pacific (SPF) started as Sell.

Lowe’s (LOW) earnings warning last night is also pulling the related and tertiary sector down.

Jon C. Ogg
September 25, 2007