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Investing.com - Citizens JMP lowered its price target on LGI Homes (NASDAQ:LGIH) to $75.00 from $140.00 on Thursday, while maintaining a Market Outperform rating following the homebuilder’s second-quarter earnings report. The stock, which has declined 35% year-to-date and trades at a P/E ratio of 8.94, continues to face market headwinds.
LGI Homes reported diluted earnings per share of $1.36 for the second quarter of 2025, missing both Citizens’ expectation of $1.74 and the consensus estimate of $1.42 per share. The earnings shortfall was attributed to lower operating margins and reduced contribution from other income sources, with revenue declining 7.89% over the last twelve months.
The homebuilder’s sales volume was described by Citizens JMP as "exceptionally weak," reflecting LGI’s ongoing challenges in qualifying potential homebuyers in the current high-interest rate environment. Despite these challenges, home sales technically met expectations.
In response to the difficult market conditions, LGI Homes management has withdrawn its annual guidance until market dynamics improve, a move Citizens JMP characterized as "disappointing but understandable."
Citizens JMP adjusted its valuation model for LGI Homes from 1.5 times forward book value to 0.8 times forward book value, resulting in the significantly reduced price target. While the company maintains strong liquidity with a current ratio of 17.99, InvestingPro data indicates the stock is currently overvalued at current levels.
In other recent news, LGI Homes reported its financial results for the second quarter of 2025, revealing a revenue of $483.5 million. This figure did not meet market expectations, as analysts had projected revenue of $504.68 million. Additionally, the company’s earnings per share (EPS) came in at $1.36, slightly below the anticipated $1.39. Despite these misses, the company’s stock experienced a notable increase in pre-market trading, influenced by strategic initiatives and future guidance. These developments are part of the recent updates surrounding LGI Homes.
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