Analysts at Wedbush downgraded shares of KB Home (NYSE:KBH) to Neutral from Outperform on Monday, maintaining the stock price target at $55 per share.
With the shares within 5% of the company's price target, the firm said it does not see an evolving catalyst to increase it.
"We are also taking this opportunity to lower our FY23 and FY24 gross margins to reflect a more competitive environment in C4Q23 versus what we expected in our 9/21/23 F3Q23 KBH writeup," the analysts noted.
While the firm's FY23 and FY24 order and closing volume estimates are unchanged for KBH, they anticipate there may be more downside than upside risk to the estimates due to the competitive situation.
"We are lowering our FY23/FY24 EPS estimates to $6.91/$7.15 from $7.03/$7.83. For F4Q23, we brought our gross margin estimate down to 20.5%, in line with KBH's guidance, versus our prior 21.2% estimate. For FY24, we trimmed our gross margin estimate to 20.5% from 21.6%," the analysts at Wedbush revealed.