Lennar (LEN) Stock Forecast & Price Target

Lennar's outlook remains positive due to continued stronger-than-expected demand for homes, which, coupled with increased capital returns, could lead to favorable upside and multiple expansion. The company projects a 5% year-over-year increase in unit closings for FY27, alongside a gross margin of 17.8%, indicating strong operational efficiency despite current market challenges, including rising incentives and competitive pricing. Furthermore, the recent decline in mortgage rates is anticipated to boost traffic and demand, while Lennar's commitment to sustainability aligns with evolving consumer and regulatory expectations, enhancing its long-term market positioning.

Lennar's financial outlook has significantly weakened, with a projected FY’26 EPS decline of 19% to $6.50, which is notably 27% below prior market estimates, driven by weaker absorption rates and margin contractions. The company's gross margin is also expected to decrease, falling to 16.1% for FY'26, reflecting a 160 basis point year-over-year decline, alongside an expected drop in deliveries and average selling prices. Additionally, the anticipated orders of 84.7k units for FY'26 indicate only a marginal increase from the prior year, overshadowed by a declining order pace, which raises concerns about the company's near-term revenue and profitability outlook.