Stocks in Motion: KB Home

Updated from 11:18 a.m.

Shares of KB Home (KBH) surged 7% after the homebuilder reported blowout earnings of $182 million, or $2.06 a share, for the second quarter ended May 31, up from $102 million, or $1.20 a share, a year ago. Revenue grew to $2.13 billion from $1.57 billion a year earlier. Analysts had expected earnings of $1.78 a share on revenue of $2.16 billion. For 2005, KB raised its earnings forecast to $9 a share from its previous outlook of $7.88 a share. The stock closed up $5.05 to $77.30.

In other homebuilding news, Smith Barney raised its recommendation on Beazer Homes USA (BZH), Hovnanian Enterprises (HOV), Meritage Homes (MTH), Pulte (PHM), Ryland Group (RYL) and KB to buy from hold. The firm said it believes the homebuilders will soon benefit from upward earnings revisions. Beazer soared $2.48 to $58.93; Hovnanian rose $2.15 to $66.22; Meritage gained $4.74 to $83.75; Pulte added $3.75 to $86; and Ryland stepped up $2.56 to $76.40.

Shares of Host Marriott (HMT) added 1% after the company boosted its quarterly dividend to 10 cents from 8 cents. The dividend will be payable July 15 to shareholders of record June 30. The stock closed up 16 cents to $17.60.

Shares of CRT Properties (CRO) rose 16% after the office building owner announced it has agreed to be acquired for $936.7 million by undisclosed clients advised by DRA Advisors. Under the agreement, CRT shareholders will receive $27.80 a share in cash, a 15.4% premium over Thursday's closing price of $24.09. The company also said it will pay a pro-rated dividend on its common stock through Sept. 30. Completion of the deal is expected to occur late in the third quarter. The stock was up $3.85 to $27.94.

Shares of Nautilus (NLS) slid 3% after the company agreed to acquire privately owned fitness apparel maker Pearl iZUMi USA for $68 million in cash. The deal is expected to be neutral to Nautilus' earnings in 2005 and is expected to add about 6 to 8 cents to 2006 per-share earnings. In 2004, the company generated sales of $49 million, according to the release. The deal is expected to close during the third quarter. The stock finished down 78 cents to $27.72.

Shares of MGM Mirage (MGM) traded down 1.9% after Merrill Lynch downgraded the casino company to neutral from buy, saying it sees limited upside for the stock after it hit the firm's $42 price target. The stock closed down a penny to $41.81.

NYSE volume leaders included General Electric (GE), up 39 cents to $36.50; Pfizer (PFE), up 18 cents to $28.78; Lucent (LU), up 6 cents to $2.98; and Exxon Mobil (XOM), up 77 cents to $60.89.

Nasdaq volume leaders included Microsoft (MSFT), was flat at $25.04; Cisco (CSCO),flat at $19.50; Intel (INTC), up 10 cents to $23.22; and Oracle(ORCL), down 12 cents to $12.34.

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