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On Tuesday, Evercore ISI exhibited confidence in KB Home (NYSE:KBH) by increasing the stock's price target from $88.00 to $95.00 while maintaining an Outperform rating. The upgrade comes after KB Home's release of its fourth-quarter earnings for fiscal year 2024, which ended in November. The homebuilder reported adjusted diluted earnings per share (EPS) of $2.53, which slightly surpassed the estimates set by Evercore ISI at $2.47 and the consensus figure of $2.45.
The company managed to achieve these figures despite a challenging economic climate, exceeding expectations in both orders and margins. Additionally, the fiscal year 2025 revenue guidance provided by KB Home, ranging from $7.0 billion to $7.5 billion, was better than anticipated. Although the higher end of the guidance is considered ambitious, it still marks a slight decrease from previous forecasts.
The optimism surrounding KB Home's financial guidance is partly based on the expected improvement in absorption rates from new community openings scheduled for the spring. Furthermore, an increase in the sale of speculative homes is anticipated to boost the company's backlog turnover ratio. This strategic approach is aimed at enhancing the efficiency of converting its backlog into recognized revenue.
The positive assessment of KB Home's performance and prospects by Evercore ISI stands out, especially when compared to the results shared by competitor Lennar Corporation (NYSE:LEN) last month. It is important to note that both companies had previously reported their third-quarter results in September, a period when interest rates were significantly lower than they are at present.
Despite these market conditions, KB Home's recent financial achievements have been recognized as encouraging by analysts.
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