Shares of home-builder stocks are under pressure on Thursday after peer KB Home (KBH) reported quarterly earnings and guidance that disappointed investors. The home-builder group, which has been a darling of Wall Street investors over the past year, is showing some strain amid a recent rebound in COVID-19 cases. KB DISAPPOINTS: On Wednesday evening, KB Home reported Q2 EPS ahead of analyst expectations on revenue that was slightly less than anticipated. For the current quarter, the home builder forecast housing revenue of $820M-$880M, lower than the consensus estimate of $1.06B. COVID RESURGENCE: KB noted that it expects employment, consumer confidence and other fundamental housing factors to also improve. “However, the speed, trajectory and strength of any such recovery remains highly uncertain, and it could be slowed or reversed by a number of factors, including a possible widespread resurgence in COVID-19 infections in the second half of 2020 without the availability of generally effective therapeutics or a vaccine for the disease,” the home-builder added in a statement. ANALYST DOWNGRADES: On June 9, RBC Capital analyst Mike Dahl downgraded KB Home to Sector Perform from Outperform with a price target of $34, up from $26. Also in early June, JPMorgan analyst Michael Rehaut downgraded KB Home to Underweight from Neutral with a $32 price target. PRICE ACTION: Shares of KB Home ended the session down 12% to $29.83 per share. OTHER HOME-BUILDERS: Most of KB Homes’ peers, including Hovnanian (HOV), PulteGroup (PHM), Toll Brothers (TOL), and D.R. Horton (DHI), were also lower, although Lennar (LEN) was up over 1%.
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