Analyst Downgrade Hits KB Home, Ryland Group

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Smith Barney Citigroup analyst Stephen Kim downgraded six homebuilders on Friday. The action led to lower share prices of two local companies, Ryland Group Inc. and KB Home.


Ryland lost 2.4 percent to close at $66.77 after the Calabasas-based homebuilder and mortgage-finance company’s stock rating was downgraded to “hold” from “buy.” Shares of KB Home dropped 3.1 percent to $112.80 after the L.A.-based homebuilder’s stock rating was cut to “hold” from “buy.”


“It is important to note that this is our first home builder downgrade in over three years,” Kim wrote in a research note. Kim also said he doubts the recent run-up in the sector will translate into higher valuations.


Other stocks moved higher on Friday, lifted by gains in semiconductors and Apple Computer Inc.’s announcement that its stock will split.


Apple, whose shares have nearly quadrupled in value over the last year on the success of its iPod music player, said it has set a 2-1 split. Apple stock, which provided support to Nasdaq on an otherwise down day, rose 3.6 percent to $81.21.


The Dow Jones Industrial Average rose 46.40, or 0.4 percent, to 10,796.01. The Standard & Poor’s 500 Index rose up 8.29, or 0.7 percent, at 1,205.30. The Nasdaq Composite Index gained 23.56, or 1.2 percent, to 2,076.66.


Among local movers, shares of IHOP Corp. gained 5.1 percent to settle at $44.70 after its stock was rated “strong buy” in new coverage by Raymond James. The 12-month price target was set at $52 per share.


And Sports Club Inc. surged 11.8 percent to close at $1.90 after the L.A.-based company announced a proposal by its four principal stockholders and their affiliates to take the company private and retire its outstanding senior secured debt. The announcement was made on Thursday after the market closed.

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