Analyst Rafe Jadrosich of Bank of America Securities reiterated a Hold rating on KB Home (KBH – Research Report), reducing the price target to $62.00.
Rafe Jadrosich’s rating is based on several factors impacting KB Home’s financial performance and market position. The company reported first-quarter earnings per share that were in line with expectations, despite a delivery miss, due to a better-than-expected gross margin. However, the outlook for fiscal year 2025 earnings per share has been lowered by 7% due to reduced orders and revenue expectations.
Additionally, KB Home’s net orders were down significantly year-over-year, and the company’s absorption rate was below normal seasonal levels. Although recent price adjustments have led to improved order rates, the overall revenue outlook for fiscal year 2025 has been revised downward. The gross margin outlook has also been adjusted due to these price reductions. Despite these challenges, KB Home has managed to grow its land position and continues to repurchase shares, supporting the decision to maintain a Hold rating as the stock is considered fairly valued at its current price-to-book ratio.
Jadrosich covers the Consumer Cyclical sector, focusing on stocks such as Somnigroup International, KB Home, and DR Horton. According to TipRanks, Jadrosich has an average return of 7.8% and a 53.56% success rate on recommended stocks.
In another report released today, Barclays also maintained a Hold rating on the stock with a $56.00 price target.