Lennar’s Hold Rating: Strong EPS Overshadowed by Declining Margins and Challenging Market Conditions

BTIG analyst Carl Reichardt has maintained their neutral stance on LEN stock, giving a Hold rating today.

Carl Reichardt has given his Hold rating due to a combination of factors impacting Lennar’s financial performance and outlook. Despite Lennar’s earnings per share for the first quarter of 2025 surpassing expectations, the company’s gross margins have declined significantly, which is a concern for future profitability. The guidance for the second quarter suggests better order and delivery volumes, but weaker pricing and margins, indicating potential challenges in maintaining profitability.
Furthermore, the company’s management has noted a weak spring selling season, with decreased consumer confidence and affordability issues forcing aggressive sales incentives. While Lennar’s asset spin-off, Millrose Properties, is facilitating faster asset turnover, the thin margins are expected to hinder return improvements in the fiscal year 2025. These factors, along with the anticipated difficult demand conditions, contribute to the Hold rating as the stock is unlikely to re-rate until there is a positive shift in margin and return trajectory.

In another report released today, KBW also maintained a Hold rating on the stock with a $128.00 price target.