Lennar (LEN) Stock Upgraded at Barclays

NEW YORK (TheStreet) -- Barclays upgraded Lennar (LEN) to "overweight" from "equal weight" on Friday.

The analyst firm also raised its price target for the homebuilding company to $53 from $45.

Barclays analyst Stephen Kim said that the firm's bullish view of Lennar is specific to the company "against the backdrop of a Neutral rating on the Homebuilding Industry."

Kim wrote, "We recognize that LEN could very well trade in sympathy with its peers for some time to come, but we note that after the group's recent pullback, valuations for the homebuilding stocks now appear more fairly valued. Meanwhile, we expect LEN's FivePoint projects to steadily command a greater valuation premium in coming quarters, driving the investment opportunity in the stock."

Separately, TheStreet Ratings team rates LENNAR CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LENNAR CORP (LEN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 21.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • LENNAR CORP has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, LENNAR CORP increased its bottom line by earning $2.81 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($3.17 versus $2.81).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Household Durables industry average. The net income increased by 47.2% when compared to the same quarter one year prior, rising from $78.12 million to $114.96 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Household Durables industry and the overall market, LENNAR CORP's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: LEN Ratings Report
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