KB Home initiated with a Hold at Truist

Truist initiated coverage of KB Home (KBH) with a Hold rating and $65 price target as part of the firm’s coverage launch of the U.S. homebuilding industry. KB Home’s low-end build-to-order model and significant shareholder returns since initiating its 2021 repurchase program are positives, but margins remain weaker than peers and limited lot supply could constrain buybacks in a demand recovery, the analyst tells investors in a research note. While margin improvement could form a longer-term bull case, the lack of a near-term catalyst suggests ROE may continue to trail the group, the firm says.