Why Is KB Home Stock Rising Premarket?

Although analysts expect sales and profit decline in the U.S. homebuilder's third-quarter report, due after market hours, the sector outlook is improving.

Shares of KB Home notched higher in premarket trading on Wednesday, driving up retail trader sentiment ahead of the company's quarterly report. Analysts expect another quarter of declining sales and profit, although the outlook for the housing sector has improved following the Federal Reserve's interest rate cut last week.

The U.S. homebuilder could report a 9% drop in third-quarter revenue and a 27% decline in adjusted net profit, according to analysts' consensus estimates from Koyfin. The expected rate is less than the decline in sales and profit in the second quarter.

Research firm Oppenheimer, which began coverage on the stock earlier this month with a "Market Perform" rating, praised KB Home's "build-to-order" model as a key long-term advantage. That service allows buyers to personalize floor plans, design features, and finishes to their preferences and budgets. Last week, Bank of America raised its price target on the company's stock.

KB Home's shares gained 0.4% in the premarket, marking a modest recovery after the stock had declined sharply, by about 7.6%, over the last two weeks. The company will report its results after the markets close on Wednesday.

On Stocktwits, the retail sentiment for KBH shifted to 'extremely bullish' heading into Wednesday’s session from 'bullish' the previous day.

Gains were also supported by Federal Reserve Chair Jerome Powell's remarks on Tuesday, who reiterated that the central bank would balance the risks from high inflation and a weakening job market in coming interest rate decisions, signaling a dovish view.

As of last close, KB Home stock is down 5% year-to-date.

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