Hovnanian (HOV) Price Target Lowered to $4.75 at Goldman Sachs

Goldman Sachs maintained a Sell rating on Hovnanian Enterprises (NYSE: HOV) and lowered its price target to $4.75 (from $5.25). Analyst Eli Hackel expected continued underperformance. New 2014- 2016 EPS estimates are $0.20, $0.38 and $0.62 down from $0.44, $0.55 and $0.71.

"We update our estimates following HOV’s earnings. Results were below expectations with most metrics missing our estimates. While it remains unclear how much of this is due to bad weather vs. other factors, given the company's more stretched balance sheet vs. peers, the company may need to turn its inventory faster to generate cash. Because of this, we expect the company could look to use incentives to a greater degree to drive sales," said analyst Eli Hackel.

"On its call, management cited material constraints due to the distribution shutdown of a primary cabinet supplier in Houston, Dallas and Phoenix and that Houston faced labor constraints, causing deliveries in that area to be delayed by a few weeks," added the analyst. "We remain Sell rated on Hovnanian given its low ranking on the GS MSA Matrix, stretched (albeit improving balance sheet), and lower growth vs. peers."

For an analyst ratings summary and ratings history on Hovnanian Enterprises click here. For more ratings news on Hovnanian Enterprises click here.

Shares of Hovnanian Enterprises closed at $4.95 yesterday.

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