Citi Initiates Coverage on Centex (CTX) with a Hold - Liquidity Position Remains Weaker Than Peers

August 13, 2008 8:32 AM EDT

Citi initiates coverage on Centex (NYSE: CTX) with a Hold. Price target $17.

Citi analyst says, "While the company has done much to strengthen its balance sheet and liquidity, its liquidity position remains weaker than its peer group average. Also, we think the jury is out on the ultimate success of both the company's transformation to an asset-lite business model as well as the various process improvements...We rate CTX as High Risk because of the uncertainty surrounding the ultimate duration and magnitude of the housing market’s downturn...Positive Factors: a quicker than expected rebound in the housing market, M&A activity, a more robust course of action by the federal government and higher than anticipated order growth and margins...Negative Factors: a dramatic and unexpected worsening of the housing market, a bankruptcy filing by a large homebuilder, the inability to access capital and worse than anticipated order growth and margins."

Centex Corporation is a residential construction company whose principal operations are focused on residential construction and related activities, including mortgage financing.

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