10:24 AM EDT, 09/25/2024 (MT Newswires) -- KB Home's ( KBH ) Q3 EPS missed Wedbush estimates because of a weaker gross margin than anticipated but demand rebounded in August due to lower interest rates, the investment firm said Wednesday in a note to clients.

The company's Q3 "order growth was less than we expected due to [year on year] declines in KB's Southwest and Southeast segments," the note said. "KB cut prices early in 3Q to maintain sales pace which we anticipate caused F3Q24 EPS of $2.04 versus our $2.09 forecast."

However, the company's "traffic and sales absorption improved in sync with lower mortgage rates through August and into September," the investment firm said.

Wedbush has a neutral rating on KB Home ( KBH ) and raised the company's price target to $75 from $67, citing a shift to a FY25 from a FY24 valuation.

"KB's initial FY25 revenue guidance of $7.5 billion was ahead of our $7.3 billion estimate and the Refinitiv consensus estimate of $7.0 billion which should also be good news for the bulls," Wedbush said.

Price: 83.80, Change: -3.63, Percent Change: -4.15