Lennar (LEN) Stock Forecast & Price Target

Lennar demonstrates a positive outlook due to continued stronger demand, leading to an anticipated 5% year-over-year growth in unit closings for FY27, alongside expected gross margins of 17.8%. The company's focus on environmentally sustainable homebuilding is also poised to meet increasing consumer and regulatory demands, enhancing its competitive positioning. Additionally, recent declines in mortgage rates have positively influenced traffic, suggesting that market conditions may favor future growth and profitability despite current pricing incentives.

Lennar's financial outlook for FY'26 indicates a significant decline in estimated earnings per share (EPS), projected at $6.50, which represents a 19% decrease and is 27% below prior expectations, driven by weaker absorption rates and shrinking margins. The company's gross margins are anticipated to decrease to 16.1%, reflecting a year-over-year decline of 160 basis points, while first-quarter estimates drop further, highlighting an ongoing trend of diminished financial performance. Additionally, a decline in backlog prices, combined with lower order rates and a cautious delivery guide, underscores a challenging environment, prompting concerns about the stock's valuation relative to its near-term return on equity and earnings risks.