Lennar Scales to New Record High Ahead of Q4 Earnings; Stock Has Tons of Upside Potential

Lennar Corp, home construction and real estate company, is expected to report earnings per share of $4.15 in the fiscal fourth quarter, which represents year-over-year growth of over 46% from $2.83 per share seen in the same period a year ago.

The Miami, Florida-based company would post year-over-year revenue growth of more than 25% to around $8.5 billion. For four quarters in a row, the company has exceeded expectations on earnings per share.

In the fourth-quarter fiscal 2021, Lennar expects to build 18000 homes with a gross margin of 28%, according to Zacks research. The number of new orders is expected to range from 15,200 to 15,400 units, while the average selling price is forecast to be $445,000. As a percentage of home sales, SG&A expenses are likely to be 6.7%.

In a note to clients, Goldman Sachs analysts raised her price target for Lennar to $140 from $108 and upgraded it from neutral and buy to buy.

Lennar’s better-than-expected earnings results, which will be announced on Wednesday, December 15 after the close of trading, could help the stock scale to a new record high. On Wednesday, the second-largest U.S. homebuilder’s stock hit an all-time high of $116.34 and closed 0.45% higher at $115.34. The stock surged over 50% so far this year.

Lennar Stock Price Forecast

Ten analysts who offered stock ratings for Lennar in the last three months forecast the average price in 12 months of $124.40 with a high forecast of $166.00 and a low forecast of $102.00.

The average price target represents a 7.86% change from the last price of $115.34. Of those ten analysts, eight rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

JP Morgan slashed the target price to $127 from $143. Raymond James lifted the price target to $120 from $105. Wells Fargo cut the target price to $107 from $112. Wedbush upped the target price to $120 from $110. BTIG increased the price target to $131 from $127.

Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst Comments

“Shares of Lennar have outperformed the industry so far this year. The company is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn resulted in higher operating leverage. Higher demand for new homes backed by declining mortgage rates and low inventory levels bodes well. Focus on the lighter land strategy to boost free cash flow will bolster the balance sheet and thereby drive returns,” noted Analysts at ZACKS Research.

“Gross margin was up 420 basis points (bps) in the last reported quarter, given effective cost control and focus on making its homebuilding platform more efficient, which in turn resulted in higher operating leverage. However, unprecedented supply chain challenges along with rising land and labour costs continue to impact Lennar’s performance.”

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