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

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