Zacks Investment Research downgraded shares of PulteGroup, Inc. (PHM) from NEUTRAL to UNDERPERFORM on September 17, 2013, with a target price of $16.00.
We are downgrading our recommendation on Pulte from Neutral to Underperform following dismal second-quarter results. Pulte's second-quarter 2013 earnings of $0.26 per share more than doubled from last year, but lagged the Zacks Consensus Estimate of $0.29 by 10.3%. Revenues also missed estimates due to disappointing net order growth. Despite witnessing strong demand in most markets, net orders declined 12% due to a lower community count as the company actively slowed down sales pace in some communities. Pulte's net order decline was a sharp contrast to double-digit increases reported by other large homebuilders. Pulte is facing supply constraints in many markets due to lack of land development and scarcity of finished lots Moreover, recent increases in mortgage rates, changes in federal lending procedure and lack of overall economic recovery could hurt demand for new homes.
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