Goldman Sachs Takes Hatchet to Homebuilders Again As Things Look Worse

Less than a month after cutting their view on homebuilding stocks, Goldman Sachs is at it again.

On September 6, the firm cut their new home sales/housing starts forecast to flat from 10% and cut 2012 growth to flat from 15%, which led to a number of price target cuts in the sector. Now the firm says, "further deterioration in the economic outlook and increasing investor risk premiums suggest that the revisions to our target prices were insufficient."

Goldman updated price targets on the group to reflect a more guarded economic tone and higher discount to homebuilder book values. On average, the price targets were cut by 9%.

In you are going to play the group, Goldman said their favorite stock picks are still Pulte (NYSE: PHM) and Toll Brothers (NYSE: TOL).

PRICE TARGET CUTS:
DR Horton Inc. (NYSE: DHI) (Neutral) from $9 to $8
KB Home (NYSE: KBH) (Neutral) from $7 to $6
Lennar Corp. (NYSE: LEN) (Neutral) from $14 to $13
MDC Holdings Inc. (NYSE: MDC) (Neutral) from $18 to $16
Meritage Homes (NYSE: MTH) (Neutral) from $18 to $16
NVR Inc. (NYSE: NVR) (Neutral) from $650 to $620
PulteGroup, Inc. (NYSE: PHM) (Buy) from $6 to $5.50
Ryland Group Inc. (NYSE: RYL) (Buy) from $12 to $11
Toll Brothers Inc. (NYSE: TOL) (Buy) from $20 to $18

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Advance Auto Parts (AAP) PT Lowered to $48 at DA Davidson Following 25% Selloff Post Q2 Results
• Cummins (CMI) PT Lowered to $675 at Jefferies
• Mizuho Reiterates Outperform Rating on Broadcom Limited (AVGO) Into EPS