KB Home (KBH) could see some risk to its guidance, which implies a quarter-over-quarter improvement in its fiscal Q4 margins, BofA Securities said in a Monday note.
The company reported fiscal Q2 earnings in line with consensus and lowered its full-year guidance to reflect a weaker revenue and margin outlook, the report said.
KB Home lowered its revenue guidance to a range of $6.3 billion to $6.5 billion, after it reported its net orders decreased 13% year over year. BofA modeled revenue below the low end of the company's guidance given that it exited fiscal Q2 with backlog down 24% year over year.
KB Home's guidance implies an improvement in fiscal Q4 margin on sales leverage, but the report pointed to risk that it will have to lower prices to achieve its revenue guidance for the full year if the macro remains weak.
BofA cut its price target on the stock to $54 from $58 while keeping its neutral rating.
Price: 53.10, Change: -0.22, Percent Change: -0.41
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