KB Home (KBH) PT Raised To $27 At Citi As Weather Impacted Closings

Citi analyst, Scott Schrier, reiterated his Buy on KB Home (NYSE: KBH) and raised his price target to $27.00 (from $23.00) after the company reported 1Q19 results with orders +4% and closings -2%. Management noted that demand progression through the quarter was encouraging, and trends held up into March. KBH continues to provide only one quarter of guidance, but maintains full year community count (+10-15% YoY) growth. KBH provided 2Q19 guidance of $900M-$950M in housing revenue, ASP of $375K-$380K, and gross margin of 17.0%-17.6%.

The analyst stated "We value KBH on projected value accretion via 2019E P/TBV analysis. Specifically, our target of $27 is based on a multiple of 1.0x 2019E TBV of ~$27 per share (previously 0.9x TBV of ~$26 per share), including the NPV of deferred tax assets of ~$5 per share. We believe the company’s growth prospects are somewhat offset by the fact that the underlying cost basis of the company's lot portfolio is above average, as well as a larger than average portion of our pro forma book value is composed of the company's DTA, which has a lower probability of further
appreciation relative to land".

For an analyst ratings summary and ratings history on KB Home click here. For more ratings news on KB Home click here.

Shares of KB Home closed at $24.74 yesterday.

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