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Wedbush analyst Jay McCanless reiterated a Neutral rating on Lennar Corporation (NYSE:LEN) ahead of its first quarter FY25 earnings release on March 20.
For the first quarter, the analyst estimates EPS of $1.70 versus the Refinitiv consensus estimate of $1.75 and revenue of $7.5 billion (+3% YoY vs. cons. of +2% YoY). The estimates do not account for the recent Millrose Properties spin-off.
Also, McCanless expects a 2% YoY decrease in orders to 17.8k homes for the quarter, in line with the consensus.
The analyst sees total closings of 17.2k, which is at par with Lennar’s guidance and the consensus estimate.
Also, the housing gross margin is expected at 19.1%, down 270bps YoY and in line with the company’s guidance, adds the analyst.
The analyst says that the gross margin and EPS estimates for the quarter are below consensus due to the expectation that mortgage rate volatility will likely impact Lennar’s housing gross margin and earnings negatively.
McCanless says he expects a strategy update from management as the Millrose spin-off is completed, potentially covering topics like equity investments in public stocks, Opendoor, and others.
Also, the analyst expects to get an operational update on the Millrose spin-off and any associated deal-related expenses.
Investors can gain exposure to the stock via iShares U.S. Home Construction ETF (BATS:ITB) and John Hancock Fundamental All Cap Core ETF (NYSE:JHAC).
Price Action: LEN shares are up 0.15% at $118.68 at the last check Wednesday.
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