Analyst Sam Reid from Wells Fargo maintained a Sell rating on KB Home (KBH – Research Report) and decreased the price target to $52.00 from $53.00.
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Sam Reid has given his Sell rating due to a combination of factors impacting KB Home’s financial outlook. Despite the second quarter results being generally in line with expectations, concerns remain regarding the company’s ability to meet its revised guidance, particularly in terms of deliveries. The missed orders and the anticipated challenges in converting backlog into sales in the fourth quarter contribute to a cautious outlook.
Additionally, while the gross margin percentage exceeded guidance, the overall revenue and delivery forecasts for the fiscal year have been lowered, indicating potential struggles ahead. The downward revision in revenue guidance and the pressure on the fourth quarter to achieve a significant backlog conversion rate suggest a challenging operational environment. These factors, along with the risk of further guidance reductions, underpin the Sell rating recommendation.
Based on the recent corporate insider activity of 34 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of KBH in relation to earlier this year.