Earnings Release: Here's Why Analysts Cut Their KB Home (NYSE:KBH) Price Target To US$61.50

It's been a good week for KB Home (NYSE:KBH) shareholders, because the company has just released its latest second-quarter results, and the shares gained 3.0% to US$52.13. KB Home reported in line with analyst predictions, delivering revenues of US$1.5b and statutory earnings per share of US$1.50, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the ten analysts covering KB Home provided consensus estimates of US$6.35b revenue in 2025, which would reflect a discernible 4.9% decline over the past 12 months. Statutory earnings per share are expected to tumble 22% to US$6.41 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$6.56b and earnings per share (EPS) of US$7.04 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

See our latest analysis for KB Home

It'll come as no surprise then, to learn that the analysts have cut their price target 6.6% to US$61.50. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on KB Home, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$49.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await KB Home shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 9.5% by the end of 2025. This indicates a significant reduction from annual growth of 8.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - KB Home is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of KB Home's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple KB Home analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - KB Home has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.