KB Home Saw 'Meaningful Improvement' In Orders After Price Cuts, Analyst Says

Shares of KB Home KBH were rising in early trading on Wednesday, after tanking in the previous session on the company’s downbeat fiscal first-quarter revenues.

The company is witnessing a softer start to the Spring selling season than in the past few years, according to JPMorgan.

The KB Home Analyst: Analyst Michael Rehaut reiterated a Neutral rating, while cutting the price target from $74.50 to $68.00.

The KB Home Thesis: Consumer demand has been impacted by “affordability and macro uncertainty, resulting in slower decision making,” Rehaut said in the note.

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While KB Home witnessed a steep decline in orders in the first quarter, its margins contracted due to a reduction in prices in mid-February to stimulate demand, he added.

Management lowered their full-year housing revenue guidance by 6% and gross margin guide by 90 basis points at the midpoint, the analyst stated.

Although KB Home recorded a “meaningful improvement” in orders during the back half of the first quarter, following the price cuts, builders are likely to face “a less supportive demand/supply backdrop in 2025,” he wrote.

KBH Price Action: Shares of KB Home had risen by 1.59% to $59.50 at the time of publication on Wednesday.

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