Friday's Sell-Off of DHI shares Unwarranted
Analysts at Citi have upgraded DR Horton (NYSE: DHI) from “sell” to “hold,” while reducing their estimates for the company. The target price for DHI has been raised from $10.75 to $10.50.
DHI has declined by about 23% since mid-August, as compared to about 12% decline in the homebuilding index. According to Citi, the sudden sell-off in DHI shares on Friday was unwarranted. Citi believes that the sell-off was the result of investors’ extremely high expectations on DHI.
The investors were extremely disappointed with DR Horton’s other metrics for the previous quarter, as indicated by discussions with analysts and volume of DHI' shares traded on that day, Citi added.
The target price has been reduced to reflect a lower-than-expected benefit to DR Horton from the recent NOL carry-back legislation, Citi said. Citi has reduced its EPS estimates for 2010 and 2011 from -0.25 to -0.33 and from 0.41 to 0.45, respectively.
