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Analysts Like Lennar Q3 Print, Say Homebuilder Well Positioned For Growth

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Analysts Like Lennar Q3 Print, Say Homebuilder Well Positioned For Growth

Sell-side analysts remained bullish on Lennar Corporation (NYSE: LEN) after the homebuilder beat estimates in the third quarter, and sent signals that homebuyers aren't yet worried about a downturn.

Lennar reported diluted third-quarter earnings of $1.59 per share, beating the consensus estimate of $1.32 on across-the-board outperformance, led by the company’s core homebuilding business.

The Analysts

Wedbush analyst Jay McCanless reiterated an Outperform rating on Lennar and maintained a $62 price target.

JMP Securities Peter Martin raised the price target from $58 to $65 and maintained a Market Perform rating.

Wells Fargo’s Truman Patterson has an Outperform rating and a $62 target price on the stock.

The Theses

While full 2020 guidance is yet to come, Martin said initial commentary implies Lennar remains well-positioned for growth, improved profitability and cash flow generation in 2020.

Among the growth drivers is the opening of more “entry-level” home communities, which is currently 40% of Lennar’s business and expected to increase.

Those “entry level homes turn faster, said McCanless.

“We believe management's F4Q19 view is based on rising demand as well as the company's mix shift to faster turning affordably priced homes,” McCanless wrote in a note. “Unlike most of our competitors, we do not believe this mix shift will produce lower year-over-year gross margins in FY20 versus FY19 which is the reason our FY20E EPS is ahead of consensus expectations.”

Homebuyers: 'Recession?'

Patterson highlighted that the strong homebuilding market continued to get stronger through the third quarter and orders were up year-over-year.

A key insight from Patterson: “Consumers don’t seem to be expecting an upcoming recession.”

Price Action

Shares of Lennar were up 0.81% on Thursday, trading at $58.31.

Related Links

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KeyBanc Raises Lennar's Price Target On Housing Market Optimism

Latest Ratings for LEN

DateFirmActionFromTo
Sep 2020SusquehannaUpgradesNeutralPositive
Sep 2020B of A SecuritiesMaintainsNeutral
Sep 2020Wells FargoMaintainsOverweight

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View the Latest Analyst Ratings

 

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