JPMorgan Upgrades Lennar (LEN) to Overweight, Says Transformation Not Reflected in Valuation

June 18, 2021 2:58 AM EDT
Get Alerts LEN Hot Sheet
Price: $105.85 +0.67%

Rating Summary:
    20 Buy, 13 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 18 | Down: 14 | New: 23
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JPMorgan analyst Michael Rehaut upgraded Lennar (NYSE: LEN) from Neutral to Overweight with a price target of $141.00 (from $115.00).

The analyst comments "We are upgrading LEN to Overweight from Neutral, as following its 2Q (Mayend) earnings and conference call, we view the stock as attractive relative to its peers and effectively not reflecting the company’s significant and ongoing business transformation. More specifically, at current levels, not only do we view LEN’s valuation as effectively not assigning much value to its proposed spin-off, but moreover, we expect the company to demonstrate further progress in its shift to an asset light model as well as, lastly, anticipate an increased level of returning cash to shareholders over time (i.e., share repurchase). Importantly, we highlight that the company reached its target of its land position being 50% optioned two quarters early, while it further noted that it does not view this number as an end goal. Moreover, we expect LEN to return more cash to shareholders over time, given the company’s strong cash flow generation and still fairly unlevered balance sheet (we estimate a post-spin pro forma net debt to capital of roughly 20%)."

For an analyst ratings summary and ratings history on Lennar click here. For more ratings news on Lennar click here.

Shares of Lennar closed at $94.65 yesterday.

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