Credit Suisse First Boston lowered its investment rating on the homebuilding sector to market weight from overweight Thursday, sending a slew of stocks sliding.
CSFB also downgraded a number of individual homebuilding stocks to underperform from neutral, including
, which was down 7.5% in recent trading;
, down 7.9%;
, down 7%; and
( WCI), down 4.6%.
The brokerage lowered ratings for a few others to neutral from outperform, including
, which was down 6% in recent trading;
, down 4.8%;
, down 6.1%;
, off 7%; and
, down 6.4%.
"Our downgrades are primarily based on our increasing inability to adequately defend the bull case in the face of incremental data that suggests the market is decelerating," analyst Ivy Zelman wrote in a research note. "We expect these issues to keep the stocks from outperforming over the next 12 months and therefore, believe it is more prudent to be neutral on the sector." Zelman said that while she doesn't expect the housing market to necessarily collapse, she no longer feels comfortable advising investors to put new capital in the group.
The Philadelphia Home-Construction Index was down 4% at midday. The Dow Jones Homebuilding Index was down 5.8%.