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My Buy/Sell Ratings on 10 Homebuilder Stocks: Analyst

Published: Tuesday, 29 Dec 2009 | 5:22 PM ET

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By: JeeYeon Park
CNBC.com Writer

The latest data from S&P/Case Shiller’s monthly report showed that home prices are still improving. But David Goldberg, building and building products analyst at UBS, said the group is still overvalued by 10 to 15 percent. What does this mean for the homebuilder stocks going forward?

“When we talk to builders on the ground, the majority of what we hear is that prices have stabilized—not necessarily increasing,” Goldberg told CNBC.

“So I think if you see prices coming up in the Case Shiller [report], it’s probably overly optimistic. …Things have stabilized, there’s some reason for optimism because of that, but I wouldn’t go too far and read too far into that.”

Goldberg said he is not investing in the homebuilders yet and remains on the sidelines.

“We’re expecting a gradual recovery in fundamentals, very slow home price appreciation and no big spikes that would change our thesis too much at any one time," he said.

Goldberg’s Recommendations:

"Buy" Rating on Toll Brothers [TOL Loading... () ]

"Neutral" Rating on Beazer Homes [BZH Loading... () ]

"Neutral" Rating on Hovnanian Enterprises [HOV Loading... () ]

"Neutral" Rating on Standard Pacific [SPF Loading... () ]

"Neutral" Rating on KB Home [KBH Loading... () ]

"Neutral" Rating on Lennar [LEN Loading... () ]

"Neutral" Rating on Ryland Group [RYL Loading... () ]

"Sell" Rating on Pulte Homes [PHM Loading... () ]

"Sell" Rating on D.R. Horton [DHI Loading... () ]

"Sell" Rating on Meritage Homes [MTH Loading... () ]

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Disclosures:

Goldberg does not own shares of BZH, HOV, KBH, LEN, MTH, RYL, SPF, or TOL.

However, he has investment banking clients who own shares of DHI and PHM. Additionally, DHI and PHM are, or within the past 12 months have been, clients of UBS Securities and non-investment banking securities-related services are being, or have been provided. Within the past 12 months, UBS Securities has received compensation from DHI and PHM.

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Disclaimer

Sectors:Construction and Materials

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