BUZZ-KB Home rises after RBC lifts rating on valuation, investor view

** U.S. homebuilder KB Home's shares KBH.N rise 5.3% to $68.77 premarket

** RBC Capital Markets upgrades KBH to "sector perform" from "underperform"

** Says the upgrade is valuation-based following recent declines and resets to investor expectations for homebuilders in FY 2025 amid affordability challenges and volatile rate environment

** "Investor sentiment has shifted meaningfully more negative over the past several months, better balancing risk/reward in our view" - RBC

** Brokerage cuts PT to $67 from $70, still a 2.5% upside to the stock's last close

** Expects KBH's upcoming quarterly results and guidance to be weak on both orders and margins

** "Gross margins are likely to see significant pressure, as sluggish demand will pressure price and cause the need for greater incentives" - RBC

** Four brokerages rate KBH "buy", nine "hold" and three "sell" or lower; their median PT is $82 - LSEG compiled data

** In 2024, stock had risen 5.2%

(Reporting by Aatreyee Dasgupta)

((Aatreyee.Dasgupta@thomsonreuters.com))