KB Home Stock Jumps After Q2 Report, But Forecasts Leave Analysts Divided

Shares of KB Home KBH traded higher on Tuesday after the company reported upbeat fiscal second-quarter revenues a day earlier.

The announcement came amid an exciting earnings season. Here are some key analyst takeaways.

BofA Securities On KB Home

Analyst Rafe Jadrosich maintained a Buy rating, while cutting the price target from $58 to $54.

Although KB Home reported in-line earnings for its fiscal second quarter, it lowered its full-year revenue and margin guidance, Jadrosich said in a note. The company had net orders of 3,500, missing expectations and representing a 13% year-on-year decline, he added.

"KBH continued to lower base home prices in underperforming communities," the analyst wrote. Management reduced their revenue guidance from $6.6 billion-$7 billion to $6.3 billion-$6.5 billion and their margin guidance from 19.2%-20% to 19%-19.4% "due to lower deliveries and regional mix," he further stated.

Check out other analyst stock ratings.

JPMorgan On KB Home

Analyst Michael Rehaut reiterated a Neutral rating on the stock.

Although KB Home reported in-line earnings, its gross margin contracted by 60 basis points (bps) sequentially and by 150 bps year-on-year to 19.7%, Rehaut said. The company's absorption rate, which indicates the pace of sales, declined to 17%, worse than expectations of a decline of 14%.

Management lowered their full-year guidance "across most metrics," the analyst wrote. The company's lowered gross margin outlook reflects a year-on-year contraction between 170 and 210 bps, he further stated.

KBH Price Action: Shares of KB Home were up 4.74% to $82.44 on Tuesday.

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