Citi Reinstates Lennar (LEN) at Buy

Citi analyst Anthony Pettinari reinstates coverage on Lennar (NYSE: LEN) with a Buy rating and a price target of $103.00.

The analyst comments "While we expect housing market conditions to deteriorate over the next several quarters (modeling FY ’23 orders -9% Y/Y, GM -480bp, EBIT -32%, EPS -33%) we view sequential improvement in net orders in 2H ’23 as a key catalyst, based on Citi’s expectation for a mid-year recession and historically lean housing inventories. While we anticipate a sharp demand correction in ’23, LEN shares appear to be pricing in something closer to a collapse, trading at 1.1x NTM TBV vs 1.5x 10-year avg. & 7.6x NTM P/E vs 11.2x avg. Given LEN’s defensive balance sheet (~11% homebuilding net debt to cap), strong optioned lot position (63% of lots controlled via option) and ’23 FCF generation (est. ~$11/share), we see an attractive set-up for the stock over NTM; Buy."

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 $87.83 yesterday.

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