LGI Homes stock rating reiterated at Market Outperform by Citizens

Investing.com - Citizens has reiterated its Market Outperform rating and $85.00 price target on LGI Homes (NASDAQ:LGIH), representing potential upside of 85% from current levels. The stock, currently trading at a P/E ratio of 7x, has seen a significant decline of over 56% in the past year, according to InvestingPro data.

The research firm updated its model to reflect management’s recent disclosures on home closings and community count for the third quarter of 2025. Both metrics came in near or below the company’s previous guidance for Q3 2025. With the next earnings report due on November 4, investors are closely watching these metrics.

Citizens noted that while these results led to lowered estimates for future years, the firm continues to believe LGI Homes will remain profitable during this challenging period and will expand its book value per share. InvestingPro analysis shows the company maintains profitability with a diluted EPS of $6.64 over the last twelve months, despite operating with a significant debt burden of $1.75 billion.

The firm cited potential for significant earnings upside once first-time homebuyer affordability improves, suggesting the current valuation of 0.5x forward twelve-month book value undervalues the company.

Citizens maintains that a more appropriate multiple would be 0.9x, which compares to the small and mid-cap group average of 1.0x, supporting its continued buy recommendation for the stock.

In other recent news, LGI Homes reported its second-quarter 2025 earnings with diluted earnings per share of $1.36, which fell short of both the consensus estimate of $1.42 and Citizens JMP’s expectation of $1.74. The company’s revenue for the same period was $483.5 million, below the forecasted $504.68 million. These earnings and revenue shortfalls were attributed to lower operating margins and reduced contributions from other income sources. In a separate development, Citizens JMP lowered its price target for LGI Homes from $140 to $75, maintaining a Market Outperform rating due to weak margins. However, after recent investor meetings, Citizens JMP analyst Aaron Hecht raised the price target to $85, citing improved insights into the company’s business strategies. Additionally, Texas Capital Securities upgraded LGI Homes from Hold to Buy, suggesting the current valuation may represent a low point for the shares. These updates highlight the ongoing adjustments and strategic evaluations taking place within LGI Homes.

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