KB Home stock was hit hard on Thursday after announcing a reduction to the company’s guidance for the fourth quarter of the year.
KB Home (NYSE:KBH) says that it is now expecting revenue for the fourth quarter of 2018 to range from $1.31 billion to $1.34 billion. This is a drop from the company’s previous revenue guidance between $1.39 billion to $1.45 billion for the period. It is also bad news for KB Home stock by sitting well below Wall Street’s revenue guidance of $1.44 billion for the quarter.
News of the lower guidance for the fourth quarter of the year comes from KB Home CEO Jeff Mezger during a recent conference call. Mezger notes that the lower guidance is due to a couple of different reasons.
The first reason for the lower revenue guidance for the fourth quarter of 2018 has to do with deliveries to Texas. The U.S. home building company says that it isn’t seeing as many deliveries in the state as it usually does.
The second reason given by the KB Home CEO for the lower revenue guidance in the fourth quarter of the year has to do with the California wildfires. He notes that the company is seeing possible delays to its closings over the wildfires, reports CNBC.
The news of a lower outlook for the fourth quarter of 2018 also had several analysts cutting their ratings and price targets for KB Home stock. Bank of America’s John Lovallo II is one such analyst. He notes that the “lower valuation multiple is warranted given the significant order decline and heightened market uncertainty in FY19.”
KBH stock was down 17% as of Thursday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.