FHA Overhang Removed For Now, KBH Outlook Improving
Analysts at Raymond James upgrade KB Home (NYSE: KBH) from “market perform” to “outperform,” while raising their estimates for the company. The price target for KBH is set to $18.
The FHA reform overhang has temporarily been removed. The analysts say that “for the time being, this vital financing lifeline will remain widely available during the 2010 spring selling season. While beneficial to all builders, we believe KB Home in particular stands to benefit the most with its industry-leading mix of first-time buyers and FHA loan underwriting (75% of KB Home’s internal mortgage originations were FHA loans in F3Q09).” KBH is poised to gain market share. The analysts believe that the company’s “profitability outlook is improving.”
Raymond James has raised its EPS estimates for FY10, FY11, and FY12 from $(2.15) to $(1.17), from $0.40 to $0.80 and from $2.15 to $2.40, respectively.
