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))