- KB Homes (NYSE:KBH) sinks 17% after cutting Q4 housing revenue guidance to $1.31B-$1.34B from its previous range of $1.39B-$1.45B; consensus estimate $1.42B.
- As a result, Bank of America Merrilll Lynch downgrades KBH to neutral.
- Q4 average selling price forecast reduced to $395,00-$400,000 vs. $400,00-$405,000.
- Now sees Q4 housing gross profit margin of 18.3%-18.6% vs. 18.3%-18.7%.
- Also cuts top end of Q4 homebuilding operating income margin forecast range: 9.3%-9.5% vs. 9.3%-9.7%.
- Cuts full-year 2019 housing revenue guidance to $4.7B-$5.2B from prior view of $5.0B-$5.3B; homebuilding operating income margin expected at 7.7%-8.7%.
- The stock decline isn't limited to KBH; the iShares U.S. Home Construction ETF (BATS:ITB) slides 3.1%.
- Other homebuilders falling: Beazer Homes (BZH -6.5%), Toll Brothers (TOL -5%), Lennar (LEN -5.1%), D.R. Horton (DHI -3.1%), PulteGroup (PHM -3.1%).
- Previously: Homebuilders a buy on seasonality - Fundstrat (Nov. 9)