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

Jayson Derrick

Homebuilder Lennar Corporation (NYSE: LEN) last week reported an EPS miss in its fiscal first-quarter results but other metrics were "encouraging," according to Raymond James.

The Analyst

Raymond James' Buck Horne downgraded Lennar from Strong Buy to Outperform with an unchanged $55 price target.

The Thesis

Lennar said it earned 74 cents per share in its February-ending quarter, which missed expectations of 77 cents per share. Horne said the miss can be attributed to a 12 percent year-over-year dip in total home deliveries due to unusually wet weather and lower land sales contributors.

On the other hand, multiple metrics in the quarter continue to justify a bullish stance on the stock, the analyst wrote. Specifically, net orders exceeded the high-end of management's guidance by 5 percent, year-over-year order comparisons improved sequentially and management reaffirmed its prior full year guidance of delivering more than 50,000 homes.

Lennar is still well positioned to win market share in the "choppy" homebuilder market while maintaining its attractive profit profile and generate notable operating cash flows, the analyst said. Coupled with the stock trading at 1.36 times adjusted book value versus 1.5 times for its peers, shares continue offering "one of the stronger" risk-reward opportunities in the space.

Price Action

Shares of Lennar were trading around $48.91 early Monday morning.

Related Links:

KeyBanc Raises Lennar's Price Target On Housing Market Optimism

KeyBanc Upgrades Homebuilders, Says Stocks Are In Position To Be Cyclical Outperformers

Latest Ratings for LEN

Date Firm Action From To
Apr 2019 Raymond James Downgrades Strong Buy Outperform
Mar 2019 KeyBanc Maintains Overweight Overweight
Feb 2019 Wedbush Downgrades Outperform Neutral

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