KB Home (KBH) Stock Forecast & Price Target

KB Home's positive outlook stems from anticipated higher demand that is expected to drive stronger sales volumes and improved pricing, which will contribute to significant earnings growth. The company’s fiscal year 2026 earnings per share (EPS) estimate has been adjusted upwards by 3% due to strategic cost reduction measures and share buybacks, which offset lower order and homebuilding revenue projections. Additionally, for fiscal year 2025, gross margins are forecasted to increase to 19.2%, reflecting improved operational efficiency and better pricing dynamics within its market segments.

The analysis indicates a challenging outlook for KB Home, highlighted by expected revenue decline of approximately 11% year-over-year to $6.16 billion in FY’25, alongside modest order growth projections of only 5% for FY’26 compared to previous estimates. Notably, the company faces significant downside risks stemming from a slowdown in the housing market and declining consumer demand particularly in California, which constitutes over one-third of its revenue, exacerbated by rising mortgage rates that disproportionately affect entry-level homebuyers. Additionally, there are increasing concerns about margin pressures due to escalating land costs and limited land opportunities in core California markets, further constraining growth potential and reducing favorable return profiles.