UBS Downgrades KB Home (KBH) to Sell; Recent Run Up Leaves Shares Over Valued

UBS downgraded KB Home (NYSE: KBH) from Neutral to Sell, price target maintained at $7.00.

UBS analyst said, "Since 8/31, KBH +47% vs. the 38% group avg and the S&P 500 +7%. As outlined in our 10 Predictions for 2012 report (out today), we still expect a gradual recovery. In turn, we do not believe the EPS power needed to justify the current valuation can be achieved."

"We are revising our forecasts for KB; our F12E EPS goes to ($0.35) down from ($0.10). Fwd years have also been adjusted. These estimates reflect our view that while its operating strategy—focusing on a build-to-order model—should drive outperformance in the long term, it should also lead to slower growth vs. more aggressive peers in the early part of a recovery."

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 $9.69 yesterday.

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