Update shared on04 Sep 2025
Fair value Increased 2.55%Despite ongoing concerns about KB Home’s reduced guidance, declining orders, and margin pressures, the consensus price target has edged up from $62.00 to $63.58 as analysts weigh sector-wide optimism about lower interest rates against company-specific headwinds.
Analyst Commentary
- Bearish analysts emphasize KB Home's weaker Q2 performance, including a 13% decline in orders (worse than expected), reduced revenue and margin guidance, and a softer gross margin outlook, all pointing to earnings and delivery pressures in 2026.
- Several analysts lowered their price targets after the company cut its full-year guidance and lowered FY25 and FY26 EPS estimates by 10% due to increasing risks to achieving updated projections.
- Ongoing concerns remain around the company's reliance on price reductions to drive buyer traffic, with a declining backlog likely to negatively impact future deliveries.
- Bullish analysts adjusted price targets upward across the homebuilding sector, citing broader market optimism about lower future interest rates and sector-wide valuation re-rating, despite specific concerns about KB Home.
- Some analysts note that even with in-line quarterly results, the lowered guidance and challenging environment mean it may still be difficult for KB Home to achieve newly established financial targets.
What's in the News
- KB Home launched multiple new communities nationwide, including The Nest Classic, Reserve, and Villas at Canyon Creek in Colorado; Chelsea Commons, Glades and Vales at Manzano, and Landings and Reserves at Caspian Bay in Nevada; Entrada Del Toro in Arizona; Camas Ridge in Washington; Lenox at Park West and Parkside at Kennedy Ranch in California; Stoney Chase in Texas; Sandal Key and The Sanctuary Townhomes in Florida; Hilliard Ridge in Florida; and Pivot Pointe in Idaho.
- Communities emphasize customizable home designs, energy and water efficiency, modern layouts, and ENERGY STAR certification, with amenities such as parks, playgrounds, pools, and proximity to shopping, entertainment, and major employers.
- KB Home enhanced its market presence through a key partnership with Berkshire Hathaway HomeServices California Properties for the final sales push at Ridgeview in San Diego County, highlighting luxury, sustainability, and fire safety features.
- The company was dropped from multiple Russell Growth indices, including the Russell 2000, 2500, and 3000 Growth benchmarks.
- KB Home completed a $549.99 million share buyback (11.47% of outstanding shares) and issued full-year 2025 guidance with housing revenues expected between $6.30–$6.50 billion and homebuilding operating income margin of 8.6%–9.0%.
Valuation Changes
Summary of Valuation Changes for KB Home
- The Consensus Analyst Price Target has risen slightly from $62.00 to $63.58.
- The Consensus Revenue Growth forecasts for KB Home has significantly risen from -3.8% per annum to -3.3% per annum.
- The Discount Rate for KB Home has risen from 8.82% to 9.33%.
Disclaimer
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