Shares of KB Home (NYSE:KBH) dropped 6.5% to $81.75 in premarket trading on Wednesday following its Q3 earnings report.
The homebuilder reported earnings per share (EPS) of $2.04 on Tuesday, slightly missing analysts' average estimate of $2.06, according to data from LSEG.
Barclays noted that KB Home's gross margin also fell short of expectations, driven by lower margins in the West Coast region and pricing pressure.
Despite the miss, KB Home raised its full-year 2024 housing revenue target to a range of $6.85 billion to $6.95 billion, up from the previously projected $6.7 billion to $6.9 billion.
Additionally, Barclays raised its price target for KB Home to $99 from $78, citing a potential 13.23% upside from the stock's last close.
Barclays also suggested that, as mortgage rates ease, KB Home management may initially focus on reducing financial incentives, with home price increases becoming more likely by the spring.
As of last close, KB Home's share price has risen 40% year to date.