Lennar (LEN) Stock Forecast & Price Target

Lennar's positive outlook is supported by stronger-than-expected demand, anticipated unit closing growth of 5% year-over-year for FY27, and projected gross margins of 17.8%, reflecting a robust operational performance. The recent decline in mortgage rates has begun to positively impact traffic, indicating potential for increased sales activity, while the company's commitment to developing environmentally certified homes aligns with growing consumer preferences and regulatory requirements. Additionally, the financial services segment, which offers mortgage financing, creates a complementary revenue stream and enhances overall capital return, supporting a favorable long-term outlook for the company.

Lennar's FY’26E EPS has been revised down by 19% to $6.50, significantly underperforming prior estimates due to a forecasted decline in absorption rates and margins. The company's gross margins are projected to fall to 16.1%, a drop of 160 basis points year-over-year, driven by disappointing order and closing figures in the recent quarter. Additionally, average backlog prices have decreased from $462,000 to $393,000 over three quarters, signaling weakening demand which may lead to further underperformance in stock valuation.