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Wedbush Upgrades Lennar Amid Favorable Homebuilder Market

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Wedbush Upgrades Lennar Amid Favorable Homebuilder Market

Wedbush downgraded homebuilding company Lennar Corporation (NYSE: LEN) in February, but the research firm sees multiple reasons why a bullish stance can be warranted again.

The Analyst

Wedbush's Jay McCanless upgraded Lennar from Neutral to Outperform with a price target lifted from $50 to $62.

The Thesis

Mortgage rates are not only near two-year lows but sitting at or below 4%, McCanless said in the note. It "doesn't take a rocket science" to conclude this is favorable for buyers. In addition, weekly purchase mortgage applications moved higher in the most recent week's findings with an 11% year-over-year gain versus the mid-to-low single-digit gain seen in the past eight weeks.

McCanless said existing home sales trends for notable regions in California shifted from a double-digit percentage decline in early 2019 to positive territory as of April. This is notable as an estimated 15% of Lennar's community count can be found in California.

Lennar will face "relatively easy" order growth comparisons and a resumption in community count development in the fiscal third quarter will help Lennar, according to McCanless.

The firm sees favorable factors in the homebuilding sector supporting a higher multiple for individual stocks.

Price Action

Shares of Lennar were trading higher by 2% to $53.07 Thursday afternoon.

Related Links:

Raymond James Downgrades Lennar On Valuation, Still Likes Long-Term Prospects

Wedbush Talks Homebuilders Ahead Of Next Week's Busy Schedule

Latest Ratings for LEN

DateFirmActionFromTo
Jun 2019MaintainsBuy
Jun 2019MaintainsOverweight
Jun 2019DowngradesOutperformMarket Perform

View More Analyst Ratings for LEN
View the Latest Analyst Ratings

Posted-In: homebuilders Jay McCanlessAnalyst Color Long Ideas Upgrades Price Target Analyst Ratings Trading Ideas Best of Benzinga

 

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