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UPDATE: UBS Starts Lennar (LEN) at Buy

January 19, 2022 4:20 PM EST
Get Alerts LEN Hot Sheet
Price: $80.16 --0%

Rating Summary:
    22 Buy, 9 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 8
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(Updated - January 19, 2022 4:25 PM EST)

UBS analyst John Lovallo initiates coverage on Lennar (NYSE: LEN) with a Buy rating and a price target of $145.00.

The analyst comments "We rate LEN shares at Buy. Three key reasons to Buy; 1) HB gross margin should remain elevated by at least +200bps on average versus its FY13-FY21 average of 23.5%, which is consistent with consensus; 2) Order growth to outpace industry new home sales (NHS) by roughly +350bps on average through FY26E; 3) Proposed spin could be transformational, even if stock revaluation takes time. LEN's FY22 earnings setup is solid, with UBSe forecasting +21% YoY home sales growth and +27% YoY EPS growth. Cons. appears too optimistic on industry volume/pricing power in FY23, but we believe this is more than discounted in the stock's current 6.7x FY23E P/E. As a result, our $145 PT implies 34% upside in the shares, despite street estimates needing to reset lower. We also view LEN's proposed spin of various assets as positive from a returns and de-risking perspective, although the intended stock revaluation may take time."

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 $101.30 yesterday.


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