KB Home Analyst Says Outlook Could Still 'Prove Optimistic,' While Flagging Cost Pressure Risks

Shares of KB Home KBH traded lower on Tuesday following the company’s release of disappointing fiscal first-quarter revenue results after the market closed on Monday.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

RBC Capital Markets On KB Home

Analyst Mike Dahl reiterated a Sector Perform rating, while reducing the price target from $67 to $63.

KB Home reported soft quarterly results, with orders down 17% year-on-year versus its "roughly flat" guidance, Dahl said in a note. While a miss was expected, the magnitude was much higher than feared, he added.

Management cut its full-year gross margin guide to 19.2%-20.0%, from their prior projection of 20%-21%, with the fiscal second-quarter guidance of 19.1%-19.5% coming in below consensus of 20.1%, the analyst stated. The company's guidance could still "prove optimistic in a softer/competitive environment with potential increased cost pressures," he wrote.

Check out other analyst stock ratings.

Keefe, Bruyette & Woods On KB Home

Analyst Jade Rahmani maintained a Market Perform rating and price target of $76.

KB Home's earnings of $1.49 per share missed consensus of $1.57 per share, with deliveries of 2,770 units declining by a higher-than-expected 9% year-on-year, Rahmani said. The company's fiscal second-quarter guidance implies a midpoint of earnings of $1.45 per share versus estimates of $1.89 per share, he added.

Management lowered their full-year housing revenue from $7.0-$7.5 billion to $6.6-$7.0 billion, average selling prices from $488,000-$498,000 to $480,000-$495,000, and gross margins from 20%-21% to 19.2%-20.0%, the analyst stated. "This implies midpoint EPS of approx. $7.22 vs. our $8.25E," he further wrote.

KBH Price Action: Shares of KB Home were down 3% to $59.91 at the time of publication Tuesday.

Read More: