Homex ADRs Drop to 4-Year Low as Goldman, Credit Suisse Say Sell

March 18 (Bloomberg) -- Desarrolladora Homex, Mexico’s largest publicly-traded homebuilder by market value, tumbled to a four-year low in New York after Goldman Sachs Group Inc. and Credit Suisse Group AG recommended selling the stock.

American depositary receipts of Homex dropped 5.6 percent to $11.20 at the close of trading, the lowest since March 2009. The Mexican stock exchange was closed today for a holiday.

Goldman Sachs analysts led by Jason Mollin reduced the rating on Culiacan-based Homex to sell from neutral. The company faces “poor expected near-term results, possible debt covenant renegotiation, and lack of positive catalysts,” they wrote in a report dated today.

“We expect the disappointing cash burn to continue in the near term, possibly forcing a debt covenant renegotiation or waiver,” the Goldman Sachs analysts wrote in the report.

Credit Suisse reiterated a rating equivalent to sell. Homex will continue to post negative free cash flow in the next two years, Credit Suisse analysts Eugenio Amador, Julian Bravo Lozano and Vanessa Quiroga wrote in a report dated today.

To contact the reporter on this story: Danielle Verbrigghe in New York at dverbrigghe@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net