UPDATE: JP Morgan Color on KB Home PT Decrease

), is providing some color on the stock. “Following KBH's 2Q (May-end) conference call, we provide the following key takeaways,” JP Morgan writes. “Overall, we believe the stock's 15% decline (S&P up 1%) was driven by overdone concerns regarding a potential capital raise as well as the company's general liquidity, and hence view yesterday's move as an overreaction. “Critically, while we believe some form of capital raise is possible if not likely over the next 6 months, we, as well as KBH, in our opinion, view equity as a less attractive option, and hence would likely at most only be a small portion of any larger capital markets transaction. Moreover, we note that excluding any potential capital raise, we model the company's FY11-end cash balance at $450 million, which we believe still represents a fair degree of liquidity and supports the company's comments that they are not currently pressured in this area, and that one potential option is to not access the capital markets at all.” KB Home closed Wednesday at $10.08.