Deutsche Bank Maintains a 'Hold' on KB Home (KBH); Equity and Debt Perspectives Converge After 2Q11

Deutsche Bank maintains a 'Hold' on KB Home (NYSE: KBH), PT lowered to $12 from $18.

Deutsche analyst says, "While KB's debt began to trade like a distressed builder's after 1Q11, the equity market's pricing of distress came swiftly (-18%) after 2Q11 results. KB's operating margins remain better than other distressed builders; however, dwindling cash and a high debt/cap mean that management must now manage the business as much to the balance sheet as to growth. KB's distress results in a stock that now has a higher beta to housing recovery; however, the post 2Q11 decline doesn't create a discrete opportunity in our view; therefore we maintain Hold."

For more ratings news on KB Home click here and for the rating history of KB Home click here.

Shares of KB Home closed at $9.78 yesterday.

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