Lennar (LEN) Stock Forecast & Price Target

Lennar has demonstrated a notable increase in valuation, with its valuation rising to 1.72x following the completion of the MRP spin-off, positioning it competitively against peers like D.R. Horton and PulteGroup. The company is projected to achieve orders growth of 3-7%, deliveries growth of 5-6%, and maintain stable gross margins between 20.0-20.3%, indicating solid operational performance despite a challenging housing environment. Additionally, Lennar's strong scale, geographic footprint, low financial leverage, and potential enhancements in return on equity from the Millrose spin-off contribute to a favorable long-term outlook for the company.

Lennar is projected to experience a year-over-year decline in orders of approximately 2% for F1Q25, with anticipated sales absorption rates falling to 4.1 orders per month, representing a 17% decrease from the previous year. The company's guidance indicates a gross margin decrease to between 19.0% and 19.25%, down from 22.1% in the preceding quarter and 21.8% a year ago, reflecting ongoing pressures from elevated interest rates and high home prices. Additionally, industry-wide commentary suggests a slowdown in customer traffic and a challenging homebuilding environment, contributing to a negative outlook for housing demand and profit margins.