NEW YORK, December 29, 2025, 10:18 ET
- JPMorgan cut its KB Home price target to $50 from $71 and reiterated a Neutral rating.
- The bank lowered its 2026 and 2027 earnings estimates after KB Home’s fiscal fourth-quarter report and pegged 2026 return on equity at about 6%.
- KB Home shares were down about 0.3% at $57.16 in morning trading, roughly in line with other homebuilders.
JPMorgan Chase cut its price target on KB Home to $50 from $71 and kept a Neutral rating on the homebuilder on Monday, according to a report carried by TheFly.
The call is the latest sign that analysts are recalibrating expectations for U.S. homebuilders as weaker demand and heavier incentives squeeze margins heading into 2026.
Investors are focusing on whether builders can defend profitability as affordability remains tight and competition shifts toward discounts and financing support to move homes.
JPMorgan analyst Michael Rehaut said the bank cut its 2026 and 2027 earnings estimates for KB Home after the company’s fiscal fourth-quarter results, while keeping a Neutral rating — a stance that typically signals an expectation the stock will perform roughly in line with the market.
Rehaut estimated KB Home’s fiscal 2026 return on equity at 6%, down from 11% in 2025 and below the company’s cost of capital — the return a business needs to justify the money it raises from lenders and shareholders.
KB Home shares were at $57.16, down about 0.3% in morning trade. Lennar was little changed, while D.R. Horton and PulteGroup were down modestly.
KB Home reported fiscal fourth-quarter results on Dec. 18, posting earnings per share of $1.92 versus analysts’ expectations of $1.79, while revenue fell 15.5% from a year earlier to $1.69 billion, MarketBeat reported.
The company’s earnings per share were down from $2.52 in the same quarter a year earlier, according to MarketBeat.
Margin pressure has been a central issue. ResiClub Analytics said KB Home’s housing gross profit margin was 17.0% in fiscal Q4 2025, down from a cycle peak of 24.1% in Q4 2021 and the lowest Q4 level since 2016.
“Adjusted housing gross profit margin was 310 basis points lower due to pricing pressure,” CFO Robert Dillard said on the Dec. 18 earnings call. A basis point is one-hundredth of a percentage point. ResiClub+1
KB Home has said it plans to lean harder into built-to-order — homes sold before construction begins — to reduce inventory carrying costs and lift margins through customer-paid upgrades and options, ResiClub wrote.
The company is targeting built-to-order deliveries of 70% or more of total volume, up from 57% in fiscal Q4 2025, according to ResiClub.
ResiClub said KB Home’s net new orders in fiscal Q4 2025 were 2,414, down from 2,688 a year earlier, and that its average selling price is down 8.8% from its 2022 peak.
MarketBeat data show KB Home has an average Hold rating from analysts and a consensus price target of about $63.82, above where the stock was trading on Monday.
