Tuesday, March 11, 2008

Fed moves lift home-builder stocks - Marketwatch

Home-builder stocks rallied Tuesday after the Federal Reserve said it would expand its securities-lending in an effort to pump more liquidity into financial markets.

"We believe the outlook is slightly better for Hovnanian following the first quarter financial release," wrote David Urani at Wall Street Strategies in a report Tuesday. He upgraded the shares to buy from hold, even though he expressed concern over gross margins, falling home prices and deliveries.

"Nevertheless, we believe the market will adjust for this, and as such, the company will still have the capacity for another upside surprise in revenues," the analyst said. "We also expect the company will not have to rely on any further debt issues in [the fiscal second quarter], and will reduce its debt balance."

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