UPDATE: Sterne Agee Initiates M.D.C. Holdings at Neutral; Fairly Valued at Current Value

Sterne Agee initiated coverage on M.D.C. Holdings

with a Neutral rating and a $37.00 price target. Sterne Agee analyst Jay McCanless noted, "We believe the financial benefits from the increased land purchases in 4Q12 appear to be priced into the shares, and we do not see another positive or negative catalyst on the horizon. […] We are valuing MDC at the upper end of our 15x to 20x P/E multiple valuation range. Our $37 price target is a 20x multiple on our FY14E EPS of $1.83. Our EPS estimate assumes MDC reverses the deferred tax asset allowance in FY13 and begins provisioning for income taxes at a 38% rate in FY14. We believe consensus FY14 EPS estimates contain a mixture of taxed and untaxed estimates which is why we are below consensus." M.D.C. Holdings closed at $38.79 on Wednesday.