UBS Raises Price Target on KB Home, Maintains “Sell” Rating (KBH)
On Friday, UBS announced that it has raised its price target on homebuilder, KB Home (KBH).
The firm has increased its price target on “Sell” rated KBH from $11 to $14. This price target suggests a 29% decline from the stock’s current price of $19.85.
Analyst David Goldberg noted, “unit orders +6% YOY, as mgmt increasingly focuses on preserving its land to maximize profitability. Although we applaud this, especially given KB’s focus on customization, we suspect it will be difficult to maintain as the cycle unfolds unless lending standards loosen significantly. Further, it should require a “heavier” balance sheet, as land in better areas will require greater capital expenditures.”
“Our lower multiple for KBH vs. peers reflects: 1) the size of the tax benefit & 2) the challenge it faces in maintaining an asset light model given its positioning,” the analyst added.
KB Home shares were up 16 cents, or 0.81%, during Friday afternoon trading. The stock is up 26% YTD.
The Bottom Line
Shares of KB Home (KBH) have a 0.50% yield based on Friday afternoon’s price of $19.85.
KB Home (KBH) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.
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