(Reuters) - Top U.S. homebuilder D.R. Horton Inc DHI.N abandoned its full-year financial targets on Tuesday, citing a jump in order cancellations as coronavirus-induced shutdowns left thousands of Americans out of work and worried about their financial future.
The U.S. housing market was on a steady footing just before the outbreak on lower mortgage rates and a healthy job market, and the health crisis now threatens to derail the sector.
The company said it experienced increases in sales cancellations and decreases in orders in late March and early April, compared to the weeks leading up to the outbreak.
There is uncertainty over the extent and timing of disruption COVID-19 - the respiratory disease caused by the new coronavirus - will have on U.S. consumer confidence, demand for homes and availability of mortgage loans, the company said.
Rival Lennar Corp LEN.N last month suspended its forecast, blaming lockdowns aimed at curbing the spread of the disease.
D.R.Horton, which reported preliminary results for the second quarter ended March 31, said gross sales orders rose 14% to 8,511 homes, but cancellations surged about 48% to 2,020 homes from a year earlier.
Still, net sales orders for the quarter increased 20% to 20,087 homes, beating analysts’ average estimate of 18,433 homes, according to IBES data from Refinitiv.
“As the country recovers from COVID, we anticipate the prior housing trends slowly return to normal in late spring/early summer due to the low level of existing homes for sale before COVID and the positive affordability trends,” Wedbush analyst Jay McCanless wrote in a note.
McCanless raised his price target to $50 from $44 and reaffirmed his “outperform” rating.
Home sales rose 8% to 14,539 and beat the 14,022 homes analysts had expected.
The company's shares rose as much as 8.6% to $40.09 in early trading, as the broader S&P 500 index .SPX surged amid signs of flattening coronavirus outbreak. The stock has fallen about 30% this year.
Reporting by Ankit Ajmera in Bengaluru; Editing by Sweta Singh and Sriraj Kalluvila
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