Hovnanian down; Credit Suisse starts coverage with underperform rating

NEW YORK, Jun 24, 2008 (Thomson Financial via COMTEX) -- HOV | Quote | Chart | News | PowerRating -- Shares of Hovnanian Enterprises Inc. fell Tuesday after Credit Suisse initiated coverage on the company with an underperform rating, saying the company's leverage was too high.

"We believe Hovnanian has eased near-term liquidity risks with its May 2008 equity issuance and $600 million private debt placement. However, we estimate that leverage remains high at 65%, which reinforces the need to focus on cash flow generation, and a likely continued slowing in the pace of community openings," Credit Suisse wrote.

"We think the challenging environment will lead investors to continue to focus on companies with strong balance sheets," it added.

Credit Suisse initiated a $6.40 price target on the homebuilder but said it would be more positive if the company focused more on debt reduction.

Shares of Hovnanian fell 8% to $5.56 Tuesday. The stock is down 65% over the past 52 weeks. Ryan Vlastelica rv/vj

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