Gold prices set for weekly drop as strong dollar weighs; Trump tariffs in focus
On Monday, Citi analyst Anthony Pettinari adjusted the price target for Lennar Corporation (NYSE:LEN) shares, reducing it to $127.00 from the previous $145.07, while keeping a Neutral stock rating. The revision followed Lennar’s first-quarter results, which surpassed earnings expectations but provided a second-quarter gross margin forecast that disappointed investors, leading to a 4% decline in the company’s shares. The company, currently trading at a P/E ratio of 7.64 with a market capitalization of $30.27 billion, has seen its stock approach its 52-week low of $111.26. InvestingPro analysis reveals 14 key investment factors for Lennar, including its attractive valuation metrics and market position.
Lennar’s management highlighted several challenges, including adverse effects from increased interest rates, buyer uncertainty, and elevated inventory levels in Florida and Texas, coupled with higher consumer debt. Despite these headwinds, Lennar reiterated its full-year 2025 volume guidance, projecting 86,000 to 88,000 deliveries, which would represent a 2-5% year-over-year organic growth. According to InvestingPro data, the company maintains a strong financial health score of 3.04 (rated as "GREAT"), with liquid assets exceeding short-term obligations.
To navigate the current market conditions, Lennar is using incentives to bolster volumes and reduce costs. The company reported a decrease in direct construction costs by 1.0% quarter-over-quarter and 2.5% year-over-year in the first quarter. In a positive light, Lennar has enhanced its asset-light strategy, with optioned lots now comprising 98% of the company’s 546,000 controlled homesites, estimated to supply approximately 6.7 years. The company’s strong cash flows adequately cover interest payments, and it maintains more cash than debt on its balance sheet, demonstrating prudent financial management.
Citi has also adjusted its earnings per share (EPS) estimates for Lennar for fiscal years 2025 to 2027, citing anticipated weaker demand and gross margins. The forecast for 2025 was cut by 16%, 2026 by 15%, and 2027 by 13%. The updated price target of $127 reflects a 1.6 times next twelve months tangible book value multiple, up from 1.5 times, recognizing improved inventory turnover post-spin. However, this is balanced by the expectation of reduced pricing power in the market. InvestingPro analysis suggests the stock is currently undervalued, with comprehensive research reports available for deeper insights into Lennar’s investment potential among 1,400+ top US stocks.
In other recent news, Lennar Corporation reported its first-quarter earnings for fiscal year 2025, showcasing a strong financial performance. The company’s earnings per share (EPS) reached $2.14, significantly surpassing the forecast of $1.75, while revenue exceeded expectations at $7.6 billion against a projected $7.42 billion. Despite these positive results, Evercore ISI downgraded Lennar’s stock rating from Outperform to In Line and reduced the price target to $131.00, citing broader market conditions and other financial metrics. The downgrade followed Lennar’s announcement of a $62.5 million mark-to-market loss related to investments, which was not included in the adjusted figures. Furthermore, Lennar’s gross margins and average selling price fell short of estimates, but financial services income and the number of closings surpassed expectations.
Additionally, Lennar completed the spin-off of Millrose Residential Properties, retaining around 20% of the outstanding shares, which are expected to be exchanged for Lennar shares in a cashless repurchase later in 2025. The company also repurchased approximately $703 million of its stock during the quarter. Looking ahead, Lennar plans to deliver between 19,500 and 20,500 homes in the second quarter of 2025, with expectations of a gross margin of approximately 18%. The company remains focused on cash flow and shareholder returns, with analysts noting potential margin recovery as market conditions improve.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.