Lennar Corp. (LEN
), the second biggest U.S. homebuilder, reported better-than-expected third-quarter earnings on Tuesday but its shares slumped along with other homebuilders after government data showed that new home construction fell more than projected in August.
it delivered 6,779 homes in the three months through August, up 7% from a year earlier, while new orders rose by 8% to 7,018 homes.
Net income, at $1.01 per share, was up from 96 cents a year earlier and well ahead of the consensus analyst forecast of 89 per share.
Still Lennar shares slumped by 4.8% to $42.92 in midday U.S. trading following the Commerce Department report
that new home construction plunged by 5.8% in August as a decline in the South offset gains in other parts of the country. Housing starts in the South, the biggest region for building, fell by 14.8%.
Lennar said while its home deliveries rose overall, deliveries in Houston declined as the slump in oil prices reduced demand in higher priced communities.
Analysts have been generally positive on Lennar, with 15 firms issuing ratings
on the company in the past year, 66% positive, with a medium-term price target of $52, which marks a 20% upside from the current level.
Analysts at Wedbush initiated coverage
of LEN with a “neutral” rating and a $46-per-share price target just prior to Tuesday’s earnings release. Wedbush noted
that “Lennar has consistently posted solid results from its homebuilding business throughout the upturn. Ahead of its F3Q16 earnings release scheduled before the market open on 9/20, we see the shares as fairly valued at current levels."