On Wednesday, Keefe, Bruyette & Woods, a financial services company, indicated a positive outlook on Lennar Corporation (NYSE: NYSE:LEN), a leading home construction company. The firm raised its price target for Lennar's shares to $183.00, up from the previous target of $175.00, while maintaining an Outperform rating on the stock.
The adjustment follows a review of Lennar's earnings projections for the second to fourth quarters of the year, which saw a modest 2% reduction by the analyst. Despite this, expectations for the year 2025 remain unchanged. The firm's forecasts for 2024 and 2025 suggest an increase in book value growth between 16% and 18%.
For the year 2024, the analyst projects a 10% growth in deliveries for Lennar, with a slight decrease in gross margins to 23.2% from 23.3%. Additionally, a growth of 11.5% in selling, general, and administrative expenses is expected, bringing it to 7.3% of sales. The financial services margin is anticipated to be stable at 50%, accompanied by a 4% reduction in the share count.
The positive stance on Lennar is further supported by Keefe, Bruyette & Woods' "Sideways" Housing Thesis, which favors homebuilders. This perspective suggests that Lennar's stock is appealing at 1.5 times its one-year forward book value. The analyst believes the current valuation of Lennar provides an attractive entry point for investors, reinforcing the Outperform rating.
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