Hovnanian Begin Again?:
The headline: Rebound In Luxury Homebuilder Hovnanian (HOV) Cut Short After Posting Third Straight Loss
Hovnanian Enterprises is feeling the effects of the subprime fallout and a softening housing market. The company lost 49 cents per share on a nearly 30% decline in revenues. Is this the bottom or is there more pain to come? The guys brought Ara Hovnanian, CEO of Hovnanian Enterprises, on set to find out.
The word: Hovnanian says the housing market remains in a state of transition. He thought the worst was over in January and February but then the subprime meltdown broke out and “changed the whole psychology of the marketplace.” He admits that the homebuilders are in a “very difficult environment” right now.
Hovnanian admits his company was affected by the subprime problems as was the entire housing market. Mainly, the subprime problems “affected the psyche of buyers,” he says.
Hovnanian says the company hates lowering prices, “but we do it.” In the long term, lowering prices is helpful though, he says, because affordability has been a problem in the industry. That said, he doesn’t see a rapid recovery in the market or for HOV stock, but he thinks the bottom will manifest itself this quarter. “I think we’re going to reach a plateau,” he says. “Things should be flat a good three quarters before we start seeing firming.”
Guy Adami has been bullish on HOV and others in the sector and he isn’t backing down. “These stocks will go a little lower,” he says, “but you’re getting very attractive levels in a lot of these names.”