Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Investing.com - Keefe, Bruyette & Woods lowered its price target on KB Home (NYSE:KBH) to $58 from $65 on Thursday while maintaining a Market Perform rating on the homebuilder’s stock.
The research firm reduced its forward 2025-2026 estimates by 18% following KB Home’s second-quarter earnings report, citing 5-7% lower deliveries, 80-100 basis points lower gross margin, and 40-50 basis points higher SG&A expenses.
KB Home’s second-quarter earnings per share came in slightly above expectations, with better-than-anticipated deliveries, gross margin, and SG&A performance, while orders declined 13% year-over-year compared to KBW and consensus expectations of 1% growth.
The homebuilder’s management noted softer market conditions in its earnings report, announced plans to scale back land investment in favor of share repurchases, and reduced its fiscal year 2025 guidance.
KBW acknowledged that KB Home’s valuation at 0.88 times current book value and 0.81 times forward book value approaches historical trough levels outside of recessions, but sees near-term risks as balanced between potential market stabilization and further weakening in the new home market.
In other recent news, KB Home reported its second-quarter earnings for 2025, slightly surpassing earnings per share (EPS) expectations with an actual EPS of $1.50 compared to the forecasted $1.46. The company’s revenue met projections, coming in at $1.5 billion. Additionally, KB Home repurchased $200 million in shares during the quarter and revised its full-year 2025 housing revenue guidance to a range of $6.3 billion to $6.5 billion. The company anticipates third-quarter housing revenues between $1.5 billion and $1.7 billion, with an average selling price projected between $480,000 and $490,000. Analysts from firms like UBS and Evercore discussed KB Home’s strategic focus on optimizing community performance and managing land investments amid a challenging market environment. The company continues to navigate regional disparities, with stronger markets in Las Vegas and Texas but challenges in Sacramento and Seattle. KB Home maintains a robust balance sheet and plans to repurchase between $100 million and $200 million of its shares in the third quarter.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.