Sterne Agee Downgrades D.R. Horton

Jay McCanless of Sterne Agee downgraded shares of D.R. Horton, Inc. (NYSE: DHI) to Neutral from Buy with a price target lowered to $23 from a previous $25.

McCanless lowered his average closing price growth assumptions to 2.4 percent year-over-year from a previous estimate of 7.9 percent following the company's guidance.

D.R. Horton plans to increase its Express neighborhoods as a percentage of the total mix due to pent-up demand. The company expects Express closings will represent 25 percent to 30 percent of its total deliveries over the next few years.

McCanless notes that management's guidance of higher Express sales suggests more lower priced homes will be sold resulting in average sales prices to be "relatively flat" in fiscal 2015.

"After seeing D.R. Horton's fiscal 2015 guidance on yesterday's conference call, we believe our initial call to continue buying the shares was inconsistent with D.R. Horton's projections for a slower year over year growth rate in closings, communities, and pricing versus our previous forecast."