Pulte raises Centex savings view, shares surge

NEW YORK (Reuters) - Pulte Homes Inc (PHM.N: Quote, Profile, Research) said its recent acquisition of a rival homebuilder will boost its financial health more than previously estimated, sending its shares up 5 percent despite a quarterly loss and ongoing challenges in the battered industry.

Pulte, which after buying Centex Corp has operations in 29 states, said on Wednesday its new target for efficiencies and savings from is $440 million, up 25 percent from its prior estimate.

The upward revision to the merger's benefits as well as higher-than-expected gross margins and lower-than-expected impairments make the third-quarter results "a positive for the company," J.P. Morgan analyst Michael Rehaut wrote in a note to clients.

Pulte shares were up 47 cents, or 5.1 percent, to $9.70 in afternoon trading on the New York Stock Exchange.

Pulte's third-quarter gross margins of 13.1 percent, excluding interest, merger costs and impairments, were up from the second quarter and were solidly higher than Rehaut's 11.2 percent estimate.

In another source of comfort for investors, Pulte retired $1.7 billion of debt in the quarter, more than Fox-Pitt analyst Robert Stevenson had expected.

"These results are not horrific, but some investors were expecting the worst," Stevenson said.

The company is operating under a waiver of one of its credit facility covenants until December 15, but says that it has enough cash -- $1.6 billion -- to forego the facility if it fails to obtain either an extension of the waiver or a new agreement.

But the Bloomfield, Michigan-based company still lost money as competition from cheap foreclosed homes and rising unemployment sap demand for new homes despite signs of stabilization in the broader housing market.