Credit Suisse Upgrades KB Home (KBH) to Neutral

Credit Suisse upgraded shares of KB Home (NYSE: KBH) to a Neutral rating from its previous rating of Underperform.

The firm believes that pricing pressure and volume will remain challenges for KBH, but anticipates that orders will pick up as 2011 goes on which would help gross margins and a mix shift towards the higher margin West region. It also expects orders to exceed the Streets expectations for April.

Credit Suisse notes that the company has fully reserved for liabilities related to its Inspirada community in Las Vegas, offset by the estimated $75 million fair value of its share of the land.

With shares falling 27% over the past three months, Credit Suisse comments, "We believe a discount is warranted as the present value of deferred tax assets represents 45% of our adjusted book value est., compared with 20% for peers, but now view the risk/reward as more balanced."

The firm is reiterating its $11 price target on shares of KBH.

For more ratings news on KB Home click here and for the rating history of KB Home click here.

Shares of KB Home closed at $11.39 yesterday.

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