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Citi analyst firm lowered its price target on Lennar (NYSE: LEN) to $117.00 from $118.00 on Wednesday, while maintaining a Neutral rating on the homebuilder’s stock following disappointing second-quarter results. According to InvestingPro data, analyst targets for Lennar currently range from $95 to $168.34, with the stock trading at $104.61, suggesting potential upside based on the consensus view.
Lennar shares fell 4% after the company missed second-quarter expectations and management noted a continuing cooling in the housing market. The homebuilder’s third-quarter gross margin guidance was described as "better than feared" by Citi, though selling, general and administrative expense guidance came in 90 basis points weaker than consensus estimates. Despite recent challenges, InvestingPro analysis indicates Lennar maintains a strong financial health score of 2.9 (GOOD), with the stock currently trading near its 52-week low, presenting a potentially attractive entry point for value investors.
Citi estimated that approximately half of the SG&A miss stemmed from lower average selling prices, which declined 9% year-over-year, and increased marketing expenditures including digital advertising and broker commissions. The remaining shortfall was attributed to additional personnel costs related to managing Lennar’s asset-light operations and technology investments.
The analyst firm reduced its fiscal year 2025 earnings per share estimate by 8% to reflect softer housing demand expected this summer and higher SG&A expenses. Estimates for fiscal years 2026-2027 were trimmed by less than 1%.
Citi’s new price target was derived by applying an unchanged 1.5x next-twelve-months tangible book value multiple to its updated estimates, resulting in the slight reduction to $117 from the previous $118 target.
In other recent news, Lennar Corporation (NYSE:LEN) reported its second-quarter 2025 earnings, revealing mixed results. The company missed earnings per share (EPS) estimates, reporting $1.90 against a projected $1.94, a negative surprise of 2.06%. However, Lennar exceeded revenue expectations, achieving $8.38 billion compared to the anticipated $8.18 billion, marking a positive surprise of 2.44%. Oppenheimer maintained its Perform rating on Lennar, highlighting concerns over increased technology investments that have led to higher selling, general, and administrative expenses. The firm noted that these investments could delay improvements in profit margins, adding uncertainty about the extent of margin reductions Lennar might face. Despite these challenges, Lennar’s liquidity remains strong, with $5.4 billion in total liquidity, including $1.2 billion in cash. The company reported that sales incentives increased to 13.3% to address market challenges, reflecting ongoing efforts to drive sales volume. Looking ahead, Lennar anticipates new orders for 22,000 to 23,000 homes in the third quarter, with an expected gross margin of approximately 18%, reflecting cautious optimism amid market challenges.
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