Hovnanian initiated with an Underperform at Citizens

Citizens initiated coverage of Hovnanian (HOV) with an Underperform rating and $74 price target which implies 35% downside versus current levels. Hovnanian’s customers rely heavily on mortgage rate buydowns and the recent spike higher in mortgage rates may make those buydowns more expensive for the company, the analyst tells investors in a research note. The firm also believes Hovnanian’s land portfolio contains older vintage lots that were underwritten to a faster sales pace than current conditions.