Ryland Group (RYL) is expected to report Q2 earnings after market close Wednesday, July 23, with a conference call scheduled for Thursday at 12:00 p.m. ET.
Analysts are looking for a loss of (79c) on revenue of $492.99M. The consensus range is ($2.16) to (18c) for EPS, and revenue of $450M to $538.14M, according to First Call.
Deutsche Bank cut its price target for Ryland on July 17 to $28 from $32. The firm said the credit crisis has lowered the premium that investors will pay for the underlying homebuilding assets.
Credit Suisse, on the other hand, is more positive on the stock, rating shares Outperform. The firm said that the company's operating strategy, substantial liquidity and modest leverage would make it well-positioned in an environment characterized by continued weak demand and declining home prices in the near-term. Ryland's liquidity position would enable the company to make land acquisitions in the current weak market, which would eventually positively impact the company's returns and margins, Credit Suisse added, and said there is likely to be an inflection point in the housing sector in spring-2009.
Given expectations of declining deliveries, revenues and prices in 2008, Moody's lowered its rating on Ryland to Ba2 from Ba1. The firm said that all of the homebuilding companies "have been, or have begun generating quarterly losses before impairments and other charges," and expects that a return to pre-impairment profitability may be difficult. Both Moody's and S&P believe it is "more than likely" homebuilders will face additional downgrades over the next two years.