Wedbush analyst Jay McCanless downgraded Lennar ( NYSE: LEN ) on Friday to Neutral from Outperform after the homebuilder's stock has reached within 5% of the analyst's $88 price target, and sees no reason to increase the target.
Lennar ( LEN ) shares, which closed Thursday trading at $87.76, has slipped 0.9% in Friday premarket trading.
"We reset our order growth and EPS expectations lower for FY22 and FY23 to reflect the weaker demand patterns recently seen by Lennar's ( LEN ) public competitors," McCanless wrote in a note to clients.
The current slowdown, though, is expected to be short-lived, he said, with home closing growth rebounding by the second half of FY2023. Lennar's ( LEN ) fiscal year ends on Nov. 30.
For comparison, rival homebuilder D.R. Horton ( DHI ) posted softer-than-expected fiscal Q3 and cut its FY2022 guidance as rising mortgage rate weigh on demand. And PulteGroup ( PHM ) reported that its Q2 cancellation rate more than doubled to 15% from 7% in the year-ago quarter.
McCanless's Neutral rating contrasts with the SA Quant rating of Strong Buy and with the average Wall Street rating of Buy.
Sound Shore Fund added to its position in Lennar ( LEN ) on its confidence in the company's balance sheet, strategy, and management team.
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Lennar downgraded to Neutral at Wedbush as stock reaches price target