The turnaround of homebuilder Hovnanian Enterprises appears on track with its encouraging earnings report in September. The shares have advanced sharply to over $25 from $5.50 only a few months ago, well-above our $19.50 price target. While the shares remain below the price at our recommendation, the now-weaker fundamental position and the potential return no longer outweigh the risks, particularly given the company’s very high financial leverage. We moved HOV shares to a Sell on October 17, as noted in an update email and on our website.
