Citi Sees Beazer Homes USA (BZH) Fundamentals Improving

Citi Investment Research & Analysis analyst Josh Levin upgraded his rating for shares of Beazer Homes USA, Inc. (NYSE: BZH) to Buy, from the previous rating of Hold, with an unchanged price target of $7 per share.

Levin upgraded Beazer Homes USA, Inc. based on valuation and said that the stock has materially underperformed its peers.

The analyst said that although Beazer Homes USA shares dropped sharply over the last few weeks, the stock's fundamentals have improved.

The Citi Investment Research & Analysis analyst wrote, "since 5/3/10, BZH is down ~24% versus its peer group which is down ~14% over the same period. We attribute BZH’s underperformance largely to the recap of the company that took place on 5/4/10. We observe that BZH’s stock dropped ~16% the day it announced it was issuing equity and mandatory convertible debt to deleverage the balance sheet. To a lesser extent, the decline in the broader equity market over that period has also adversely affected BZH’s stock price."