surged 6% Thursday after Bank of America upgraded the homebuilder to buy from neutral.
Improving traffic is helping to stabilize sales and soften price declines at the company, Bank of America analyst Daniel Oppenheim wrote in a research note Thursday morning.
Oppenheim's January monthly survey of real estate agents showed significant traffic improvement in Hovnanian's core markets of Washington, D.C.; Florida; the so-called Inland Empire section of Southern California; and the tri-state region of New York, New Jersey and Pennsylvania.
The company 's cash flow this year likely will be used to reduce leverage and prepare the builder for acquisition opportunities in late 2007 or 2008, the analyst wrote.
"Hovnanian has a successful track record integrating acquisitions while achieving industry-leading returns," Oppenheim wrote.
Hovnanian shares recently were up $1.90, or 5.7%, to $35.19.