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BofA Securities reduced its price target on Lennar (NYSE:LEN) to $105.00 from $110.00 on Wednesday, while maintaining a Neutral rating on the homebuilder’s stock. Currently trading at $104.98, near its 52-week low, InvestingPro analysis suggests the stock is undervalued, with a P/E ratio of just 8.33x.
The price target adjustment follows Lennar’s second-quarter fiscal 2025 adjusted earnings report, which showed earnings per share of $1.81, or $1.90 excluding mark-to-market losses on investments. This figure fell below BofA’s estimate of $2.08, primarily due to higher selling, general and administrative expenses, lower deliveries, and lower average selling prices. Despite these challenges, InvestingPro data shows Lennar maintains strong financial health with an overall score of 2.9 (GOOD), supported by robust cash flows and solid balance sheet metrics.
BofA noted that Lennar’s third-quarter guidance for deliveries and gross margin aligned with its forecast, but the company’s SG&A expense projection of 8.0%-8.2% exceeded BofA’s initial forecast of 6.7%.
The research firm lowered its fiscal 2025 earnings per share estimate by 12% to reflect the higher SG&A expenses. BofA also reduced its price-to-tangible book value multiple from 1.4x to 1.3x, citing a lower return on equity outlook for the homebuilder.
BofA maintained its Neutral rating on Lennar, describing the stock as having "balanced risk-reward" while noting it sees "more upside in other homebuilder stocks with higher ROE profiles trading at similar valuations." This aligns with recent InvestingPro data showing five analysts have revised their earnings expectations downward for the upcoming period.
In other recent news, Lennar Corporation reported its second-quarter 2025 earnings, revealing a slight miss on earnings per share (EPS) but exceeding revenue expectations. The company reported an EPS of $1.90, falling short of the forecasted $1.94, but surpassed revenue forecasts, achieving $8.38 billion compared to the anticipated $8.18 billion. Despite the EPS miss, Lennar’s stock saw positive movement in premarket trading. Analyst firms have responded with adjustments to their price targets for Lennar. RBC Capital lowered its price target to $98, citing gross margin pressure and increased expenses, while maintaining a Sector Perform rating. UBS also reduced its price target to $146 from $164, maintaining a Buy rating and noting the company’s operating strategy could be beneficial over time. Citi lowered its price target slightly to $117, maintaining a Neutral rating after Lennar’s disappointing second-quarter results. Oppenheimer reiterated its Perform rating, highlighting concerns over Lennar’s technology investments and their impact on profit margins. These recent developments reflect the challenges Lennar faces in a cooling housing market, with analysts adjusting expectations accordingly.
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