UPDATE: Sterne Agee Downgrades Beazer Homes on Strategy of Reducing Underperforming Communities

In a report published on Tuesday, Sterne Agee analyst Jay McCanless downgraded Beazer Homes  BZH from Buy to Neutral and maintained a price target of $22.00.

In the report, Sterne Agee noted, "Headline Risk Is The Reason We Are Downgrading BZH. We believe BZH management is pursuing a strategy of reducing underperforming communities in FY13. Since this culling will likely result in negative Y/Y community count growth, we anticipate Y/Y order comparisons will be -5.0% in F3Q13 versus our group estimate of 20.5% growth and +10.0% in F4Q13 versus our group estimate of 20.5% growth. We are concerned that if our order estimates prove correct, BZH's share price could be pressured because of below-average operating comparisons versus the group."

Beazer Homes closed on Monday at $22.73.