Wells Fargo Upgrades M.D.C. Holdings (MDC) to Market Perform; Valuation Call

Wells Fargo upgraded M.D.C. Holdings (NYSE: MDC) from Underperform to Market Perform with a price target range of $17.55-$19.30 (from $20-22).

Wells analyst says, "Despite MDC's weak margins and murky visibility towards profitability, we see support for shares at 1.0-1.1x our FTME tangible book value per share or $17.55-19.30 which is our new valuation range (down from $20-22). MDC took additional cost cutting measures during the quarter and retired $237MM in debt in July, both of which should save the company money in 2012. However, gross margin remain weak, and we do not believe MDC will be profitable in 2012. Our 2011E EPS goes to -$1.84 from - $1.44 due to the Q2 miss, lower forecasted gross margin, and early retirement of debt charge next quarter. Our 2012E EPS goes to -$0.71 from -$0.84."

For more ratings news on M.D.C. Holdings click here and for the rating history of M.D.C. Holdings click here.

Shares of M.D.C. Holdings closed at $19.60 yesterday.

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