Friday, Credit Suisse upgraded Lennar Corp. (LEN) shares to Outperform from Neutral and increased its price target to $16 from $15.
Analyst Oppenheim upgraded the stock and increased price target based on his expectation of improvement in operating profitability in 2010 based on improving gross margins and strong cost controls. The analyst sees the valuation as attractive at 1.0x both tangible book value and his adjusted book value estimate.
The analyst views improving gross margins, 15.6% ex-charges in third quarter, up from 14% in second quarter and 14.3% in first quarter, and continued focus on reducing SG&A as key positives and anticipate a return to operating profitability, ex-charges, as soon as fourth quarter, he expects gross margins excluding charges of 15.3% in fourth quarter and SG&A to represent 13.3% of revenue.
The analyst said that Lennar has reduced JV recourse debt exposure by 30% year-to-date to $380 million and total JV debt by 48% as a result of unwinding ventures and the resolution of the LandSource bankruptcy, upon which all debts were discharged and Lennar took a 15% stake. The issuance of $225 million of equity since April has further bolstered the balance sheet.
The analyst noted that change to NOL look-back will likely boost cash by $200-$300 million. The analyst believes Lennar can receive a $200-$300 million cash refund from the lookback, as it had $217 million in federal NOL's in 2008 and he thinks taxable losses were likely larger in 2009. This represents about $1.70/share of additional cash.
Currently, LEN is up $0.70 or 5.18% and trading at $14.21.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.