KB Home stock rating upgraded by Barclays on strong execution and returns potential

Investing.com - Barclays upgraded KB Home (NYSE:KBH) from Equalweight to Overweight and raised its price target to $71.00 from $49.00. The new target represents a 12% upside from the current price of $63.33, though still below InvestingPro’s Fair Value assessment, which indicates the stock remains undervalued.

The upgrade reflects Barclays’ preference for KB Home on a relative basis, citing the homebuilder’s strong execution and returning focus to build-to-order (BTO) operations. This aligns with the company’s "GOOD" overall financial health score of 2.76 according to InvestingPro data.

Barclays highlighted KB Home’s potential for upside to returns long-term, suggesting that return on equity (ROE) could meaningfully recover into 2027 as the company maintains discipline on capital allocation.

The investment bank noted that KB Home’s shift toward build-to-order could benefit its margin profile, especially as the company has reduced cycle times significantly.

Barclays sees a path to 10% ROE in 2027 for KB Home, supported by the company’s $1 billion share repurchase authorization.

In other recent news, KB Home announced a new $1 billion share repurchase program, replacing its previous authorization. This move is part of the company’s strategy to balance capital allocation and invest in future growth while returning capital to stockholders. Additionally, KB Home has granted long-term incentive awards to its executive officers through performance-based restricted stock units, which will be evaluated over a three-year period based on earnings, return on invested capital, and revenue growth. The company also declared a quarterly cash dividend of $0.25 per share, payable on November 26, 2025, to stockholders of record as of November 13, 2025.

Analyst activity around KB Home includes UBS reiterating its Buy rating with a price target of $83, citing stable performance amid market challenges. RBC Capital, meanwhile, raised its price target to $59 from $58, maintaining a Sector Perform rating, and noted a 3% increase in its fiscal year 2026 earnings per share estimate despite lowering projections for orders and revenue. During the fiscal third quarter, KB Home reported market stabilization in Florida and Texas, with improved absorption rates in Florida. These developments reflect ongoing adjustments and strategic planning by the company to navigate the current market landscape.

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