Shares of Lennar Corporation (NYSE:LEN) recovered slightly in early trading on Thursday, after tanking on the company’s fiscal third-quarter results.
Here are some key analyst takeaways:
- Truist Securities analyst Jonathan Bettenhausen maintained a Hold rating and price target of $75.
- BofA Securities analyst Rafe Jadrosich reiterated an Underperform rating and price target of $70.
- Oppenheimer analyst Tyler Batory reaffirmed a Perform rating on the stock.
- Citizens JMP Securities analyst James McCanless maintained a Market Perform rating.
Check out other analyst stock ratings.
Lennar Analyst Takes
Truist Securities: The biggest surprise in Lennar’s earnings release was order results, Bettenhausen said in a note. He elaborated on this:
- At the end of the quarter, new orders were just 20,879, lower than Street expectations of 21,473.
- This translates to a sales pace of 4.1 home per community per month, down 12% year-on-year.
- The ASP (average selling price) was $359,000, below consensus of $370,000.
- These results indicate that "business has clearly deteriorated".
The company reported earnings of $1.19 per share, significantly lower than Steet expectations of $1.28 per share, the analyst stated. "This was driven by a ~6% y/y contraction in home sale revenue ($7,734 million vs $7,894 million Street consensus)," he further wrote.
BofA Securities: Lennar’s net orders declined 9% year-on-year, while order ASP fell 5% sequentially, Jadrosich said. These results highlight "ongoing pricing pressure despite lower incentive levels," reflecting weak housing demand and affordability headwinds.
Homebuilding gross margin contracted by 167 basis points (bps) to 15.8%, "reflecting lower revenue per square foot and higher land costs," the analyst wrote. Lennar’s free cash flow burn exceeded $500 million in the quarter, he further stated.
Oppenheimer: All Lennar’s homebuilding metrics fell short of the midpoint of management’s guidance, Batory said. The company reported revenue of $8.05 billion and earnings of $1.23 per share. It missed the consensus estimates of $8.32 billion and $1.28, respectively.
Management announced soft guidance for the fiscal fourth quarter, with closing volume of 22,000 to 23,000 coming in below Street expectations of 23,811, the analyst stated. Considering order and gross margin guidance, "the outlook suggests EPS below the current Street estimate of $2.00," he added.
Citizens JMP Securities: In Lennar’s core homebuilding segment, closings of 20,800 and an average closing price of $372,000 fell short of Citizens’ forecast of 21,100 and $377,000, respectively, McCanless said. Unit orders declined 9% year-on-year to 20,900 homes and housing gross margin also fell short of expectations, he added.
"On tomorrow’s call, we will look for any color on September traffic and demand trends, and the impact of 30 year mortgage rates over 7% on Lennar’s customer base," the analyst further wrote.
Price Action
Lennar shares had risen 0.89% to $79.06 at the time of publication on Thursday.
Image: Shutterstock
Login to comment