Corp. Geo SAB, Desarrolladora Homex SAB (HOMEX*) and Urbi Desarrollos Urbanos SAB (URBI*) fell for an eighth day as reports from Goldman Sachs Group Inc. and Credit Suisse Group AG fueled concern over the homebuilders’ prospects.
Geo plunged 14 percent to 6.84 pesos at 11:38 a.m. in Mexico City. Homex fell 13 percent to 21.50 pesos while Urbi fell 8.3 percent to 2.88 pesos. The Habita index of Mexican homebuilders declined 10 percent.
Goldman Sachs lowered its price targets for Urbi, Geo and Homex and cut its rating on Homex to sell from the equivalent of hold yesterday. Credit Suisse maintained its recommendation of the three companies at the equivalent of sell. Both banks cited unsustainable cash burn among the three homebuilders.
“We do not believe that a sustainable recovery in cash flow is likely to occur in the near term,” Goldman Sachs analysts led by Jason Mollin wrote in their report published yesterday. “We believe additional cash burn could force debt covenant renegotiations in some cases.”
Urbi has tumbled 65 percent in 2013, Geo has fallen 55 percent and Homex has lost 19 percent. The Habita index has dropped 35 percent.
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