Lennar Faces Margin Pressures in Weak Environment, RBC Says

MT Newswires Live00:34

Lennar (LEN) faces margin pressures in a soft consumer environment following a weak Q4 performance and Q1 guidance, RBC Capital Markets said in a note Wednesday.

The report also said the FY'26 guide and expectations around a recovery in margin later this year still pose risk to earnings.

"While numbers may have 'reset' yet again, there is no quick fix to margin headwinds in an affordability-constrained/soft consumer environment," the note said.

RBC analysts said they expect the company's low gross margin percentage and return on equity to continue as it focuses on sales volumes to meet its growth target of about 3%.

Elevated incentives do not signal a rapid profit rebound but rather an indication that home prices are still too high, they said.

RBC downgraded the stock to underperform from sector-perform and cut its price target to $95 from $106.

Price: 110.63, Change: -1.60, Percent Change: -1.43

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