Market Overview

Raymond James: 'Strong Entry Point' For KB Home

Raymond James: 'Strong Entry Point' For KB Home
Related KBH
28 Stocks Moving In Thursday's Pre-Market Session
A Peek Into The Markets: US Stock Futures Down Ahead Of Economic Data, Fed Speakers

Following strong upside and continued momentum, one analyst raised estimates for homebuilding company KB Home (NYSE: KBH)

The Analyst

In a Sept. 27 note, Raymond James analyst Buck Horne upgraded KB Home from Market Perform to Outperform with a $30 price target.

The Thesis

KB Home's earnings came in at 87 cents per share, beat estimates and amounting to 68-percent growth year-over-year.

“Primary upside variances relative to our model included: 1) significant gross margin upside (18.7% vs. our 17.8% est.), partially driven by a favorable mix of California home deliveries; 2) a lower than expected SG&A ratio (9.4% vs. our 9.6% est.) which marked a new 3Q company record; and 3) a 24% effective tax rate which came in below 27% guidance, representing a $0.04/share benefit.”

The company’s net orders increased 3 percent, overcoming a 7-percent decline in average community count driven by timing issues between the early close-out of communities versus delayed new openings, Horne reported.

“Nevertheless, KBH reported its third consecutive quarter of double-digit y/y growth in sales absorption per community (+11% in 3Q), boosted by a 35% y/y order increase in the Southeast region where KBH’s Florida operations are picking up significant market share.”

Horne considers the company’s strong absorption, inventory position and 2019 community count growth sufficient to raise guidance, despite a slightly less favorable margin mix.

Price Action

KB Home's stock was set to open Friday around $24 per share.

Related Links:

JMP Upgrades KB Home After Q3 Print

KB Homes Downgraded On Valuation Risk After 'Ballistic' Growth

Latest Ratings for KBH

Jan 2019BuckinghamInitiates Coverage OnNeutral
Nov 2018JMP SecuritiesMaintainsMarket OutperformMarket Outperform
Nov 2018Credit SuisseMaintainsUnderperformUnderperform

View More Analyst Ratings for KBH
View the Latest Analyst Ratings

Posted-In: Buck Horne homebuilding Raymond JamesAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (KBH)

View Comments and Join the Discussion!

Latest Ratings

EMNMorgan StanleyUpgrades90.0
DERMRaymond JamesUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Zynga Is Well Positioned In The Favorable Video Game Market, Stifel Says

Citi Downgrades Tesla To Sell, Faces 'Risk Of A Spiral'