Brokerage firm KBW hiked its price targets on two homebuilder stocks today. Specifically, the firm lifted its target on KB Home (NYSE:KBH) shares to $33 from $31, and hiked its price target on Lennar Corporation (NYSE:LEN) stock to $74 from $70. Both of the revised targets represent new-high territory for KBH and LEN. Below, we'll take a closer look at the pair of homebuilders -- and reveal which stock could rally next week, if history repeats.
Encouraging housing data has been a boon for KBH and its sector peers, with the stock nearly doubling in the past year. KB Home shares peaked at $31.95 earlier this week, marking their highest point since the financial crisis. At last check, the equity was within a chip-shot of that high, up 0.3% at $31.74.
Despite the stock's long-term rally, KBH remains plagued by pessimism. Not one of the 13 analysts following the shares deems it worthy of a "buy" or better endorsement, leaving the door wide open for upgrades to fuel additional gains. Meanwhile, short interest represents nearly 18% of KB Home stock's total available float, and would take almost six days to buy back, at the security's average pace of trading. A short squeeze would also be a tailwind for the shares.
Lennar stock has also excelled on the charts, rallying more than 50% in 2017, and notching a decade-plus high of $64.04 moments ago. The shares were last seen a penny shy of here, up 0.4% to trade at $64.03.
As with KBH, LEN stock has rallied in spite of skepticism. Seven of the 17 analysts following the shares maintain tepid "hold" ratings, and short interest skyrocketed more than 165% in the past two reporting periods. These bearish bets would now take nearly a week to unwind, at Lennar stock's average pace of trading.
Plus, LEN has seasonality in its favor. The stock has ended Christmas week higher eight of the last 10 years, averaging a one-week gain of 0.89%, and putting it on the list of the 25 best stocks to own next week, historically.