Sprouts Farmers Market closes $600 million revolving credit facility
Investing.com - Citizens lowered its price target on Lennar (NYSE:LEN) stock to $130 from $150 on Friday, while maintaining a Market Outperform rating following the homebuilder’s second-quarter earnings report. The stock, currently trading at $103.41, remains significantly below its 52-week high of $193.80.
The homebuilder reported normalized earnings per share of $1.90 for its fiscal second quarter of 2025, meeting Citizens’ expectations but falling short of the $1.94 consensus estimate. The company also issued weaker guidance regarding gross margins and elevated selling, general and administrative expenses. According to InvestingPro, seven analysts have recently revised their earnings estimates downward for the upcoming period, though the company maintains a solid financial health score.
Lennar management pointed to a soft housing market, noting that homeownership affordability continues to be pressured by high interest rates, which has required increased concessions to attract buyers. The company is also implementing multiple operational updates that require higher near-term G&A expenses.
Citizens indicated these operational moves are appropriate but expressed disappointment that items such as accounting system upgrades and floor plan optimization were not already completed, especially since the firm has "been hearing about the optimized LEN machine for years."
Despite these concerns, Citizens views Lennar shares as undervalued at 1.1 times forward book value, citing the company’s scale and low leverage profile. The new $130 price target represents potential capital appreciation of 25.7% plus a 1.9% dividend yield, for a total potential return of 27.6%. InvestingPro analysis confirms this undervaluation thesis, with the company trading at an attractive P/E ratio of 8.6x and maintaining an impressive 48-year streak of consecutive dividend payments.
In other recent news, Lennar’s fiscal second-quarter 2025 earnings report has prompted several analyst firms to adjust their price targets and earnings estimates for the company. BofA Securities lowered its price target to $105.00, citing higher selling, general, and administrative (SG&A) expenses as a primary concern, which also led to a 12% reduction in its earnings per share estimate for fiscal 2025. RBC Capital also reduced its price target significantly to $98.00, highlighting pressures from gross margins, increased SG&A expenses, and lower selling prices as factors affecting their 10% cut in earnings per share estimates.
UBS, maintaining a Buy rating, adjusted its price target to $146.00 due to challenges from increased incentives and SG&A expenses, but expressed optimism about Lennar’s long-term strategy. Citi lowered its price target slightly to $117.00, pointing to a cooling housing market and increased marketing and personnel costs as reasons for its 8% reduction in the fiscal 2025 earnings estimate. Oppenheimer reiterated its Perform rating, underscoring concerns about Lennar’s technology investments and their impact on margins.
Across these analyses, a common theme is the impact of higher SG&A expenses and lower selling prices on Lennar’s financial outlook. The company’s guidance for the third quarter, particularly concerning deliveries and gross margins, was noted to align with some forecasts but fell short of consensus expectations in other areas. These developments reflect a cautious stance from analysts, who are adjusting their expectations amid a challenging market environment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.