UBS Raises Price Target on KB Home (KBH) to $12 as HB EBIT Margin Drives 2Q

UBS maintained a Sell rating on KB Home (NYSE: KBH), and raised the price target to $12.00 (from $11.00), following the company's 2Q earnings report. KBH reported EPS of $0.22, ahead of UBS' $0.18 estimate. The outperformance was primarily driven by better than expected HB EBIT margin.

Analyst Susan Maklari commented, "KB reported F2Q EPS of $0.22—based on a normalized tax rate and excluding charges related to the company's exit of the Washington D.C. market—ahead of our $0.18 forecast. The outperformance was primarily driven by better than expected HB EBIT margin (ex. impairments, incl. interest), adding ~$0.04 to EPS. Additionally, HB revenues increased 33% (+30% in units & +2% in ASP) vs. our forecast of +21% (+15% in units & +5% in ASP), a ~$0.02 benefit to the quarter. This was partially offset by lower than expected profit from financial services and JVs, reducing EPS by ~$0.01. We note that results in the quarter were impressive and reflect the strength of demand through the spring, especially among first time and entry level buyers."

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 $14.54 yesterday.

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