Citizens JMP raises LGI Homes stock price target to $85 on business insights

Investing.com - Citizens JMP analyst Aaron Hecht maintained a Market Outperform rating on LGI Homes (NASDAQ:LGIH) while raising the price target to $85 from $75 following recent investor meetings in Chicago. Currently trading at $63.41, the stock has shown strong resilience with a P/E ratio of 9.59, according to InvestingPro data.

The new price target represents 90% of forward twelve-month book value, up from the previous 80%, according to the research note. The analyst gained greater insight into multiple aspects of LGIH’s business during the meetings, including competitive positioning of community locations, adjustments to the sales force, and inventory optimization strategies. InvestingPro analysis reveals the company operates with a significant debt burden, with a debt-to-equity ratio of 0.85.

LGI Homes has been experiencing a slower sales pace, which was highlighted in its second quarter 2025 earnings report. Management’s response includes a plan to reduce standing spec inventory, which is expected to bring leverage back toward 40% by early 2026.

The company also plans to reduce leverage and eventually buy back stock as part of its strategy to deal with lower demand while maintaining profitability. These measures form the basis for Citizens JMP’s continued Market Outperform rating.

Recent comments by Federal Reserve Chairman Powell regarding potential interest rate reductions have raised optimism across the housing sector, providing a potentially positive backdrop for LGI Homes’ operations.

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 fell short of analysts’ expectations, which had forecasted revenue of $504.68 million. The company also reported diluted earnings per share of $1.36, missing both the consensus estimate of $1.42 and Citizens JMP’s expectation of $1.74. The earnings shortfall was attributed to lower operating margins and reduced contributions from other income sources. In response to these results, Citizens JMP adjusted its price target for LGI Homes, lowering it from $140.00 to $75.00, while maintaining a Market Outperform rating. Despite these financial misses, LGI Homes’ stock experienced a notable rise in pre-market trading, driven by strategic initiatives and future guidance. These developments highlight the complexity of market reactions to earnings reports.

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