Lennar’s Hold Rating: Balancing Sales Pace and Profitability Amidst Market Challenges

Rafe Jadrosich, an analyst from Bank of America Securities, reiterated the Hold rating on Lennar (LEN – Research Report). The associated price target was lowered to $105.00.

Rafe Jadrosich has given his Hold rating due to a combination of factors affecting Lennar’s financial outlook. The company’s recent earnings report showed lower-than-expected earnings per share, primarily due to increased selling, general, and administrative expenses and reduced deliveries. This has led to a downward revision of the earnings estimate for fiscal year 2025, reflecting the impact of these higher costs.
Additionally, Lennar’s strategy of prioritizing sales pace over price, amidst a challenging housing market with high mortgage rates, suggests a focus on maintaining volume rather than short-term profitability. The company’s commitment to technology investments is also expected to pressure its EBIT margins in the near term. Given these factors, Jadrosich sees a balanced risk-reward scenario for Lennar, with potentially better opportunities in other homebuilder stocks that offer higher returns on equity at similar valuations.

In another report released today, Barclays also maintained a Hold rating on the stock with a $95.00 price target.