Analyst: Lennar Stock Faces Multiple Headwinds

Year-to-date, LEN sports a more than 31% deficit

Deputy Editor
Jul 12, 2022 at 10:08 AM
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J.P. Morgan Securities downgraded Lennar Corporation (NYSE:LEN) to "neutral" from "overweight" earlier today. The analyst in question also lowered its price target by $3 to $80, and noted several headwinds the homebuilding name faces, including softening sales and higher incentives. At last check, the equity was up 0.7% to trade at $79.28.

The brokerage bunch was mostly bullish towards Lennar stock coming into today, which leaves plenty of room for additional bear notes to roll in. Digging deeper, seven of the 11 firms in coverage still carry a "buy" or better rating, while six called LEN a tepid "hold" or worse.

The options pits are already pessimistic, with puts ruling the roost. This is per the stock's 50-day put/call volume ratio of 3.26 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 99% of readings from the past 12 months. This indicates long puts have been getting picked up at a much faster-than-usual clip.

Echoing this, LEN's Schaeffer's put/call open interest ratio (SOIR) of 1.21 sits in the elevated 81st percentile of annual readings, pointing to a clear put-bias among short-term options traders.

The 100-day moving average rejected Lennar stock's latest rally off its June 17, roughly two-year low of $62.60. The securities continues to face pressure at the $81 level, and carries an over 31% year-to-date deficit.

 

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