By Lennar stock LEN gained 5% on Tuesday after Berkshire Hathaway purchased $212.4 million worth of the US homebuilder’s shares over three trading days.
Berkshire bought 2.74 million Lennar shares, including Class A and Class B stock, bringing its ownership of the company to just over 10%.
The purchases add to Berkshire’s growing exposure to the US housing market as Lennar faces weaker demand, elevated mortgage rates and affordability pressures.
Lennar shares have fallen almost 20% in the year so far.
Berkshire doubles down on Lennar
Berkshire Hathaway’s latest purchases represent a significant increase in its Lennar position, with the conglomerate buying shares even as the homebuilder faces a challenging operating environment.
The investment adds to Berkshire’s broader housing exposure.
The conglomerate also holds positions in other homebuilders, including D.R. Horton, and completed its $6.8 billion acquisition of Taylor Morrison in July.
Berkshire has made several other portfolio changes this year, including increasing its Alphabet position by about 48.1 million shares and adding to holdings in Delta Air Lines and Macy’s.
The Lennar purchases come as the homebuilder’s stock has declined over the past year, reflecting pressure on housing demand and profitability.
Lennar reports weaker third-quarter results
Lennar reported third-quarter net earnings of $284 million, down from $591 million a year earlier.
Adjusted earnings came in at $1.23 per share, or $1.19 on a GAAP basis, below the $1.30 consensus estimate.
Revenue was $8.05 billion, also below the $8.31 billion estimate.
New orders declined 9% year over year to 20,879 homes, while deliveries fell 3% to 20,840 homes.
Gross margin dropped to 15.8% from 17.5%, with Lennar using incentives and pricing adjustments to support demand.
The company lowered its full-year 2026 delivery outlook to 80,000-81,000 homes from its previous forecast of 82,000-83,000.
Lennar ended the quarter with $1.2 billion in cash and $3.6 billion in total liquidity.
Its construction cycle time fell to 116 days, while homebuilding debt represented 16.6% of total capital.
For the fourth quarter, Lennar expects new orders of 19,500-20,500 homes and deliveries of 22,000-23,000 homes.
The company forecasts gross margins of 15.5%-16% and earnings per share of $1.30-$1.65.
Analysts remain cautious on Lennar
Lennar’s third-quarter results have prompted several analysts to lower their price targets as housing demand and affordability remain under pressure.
CEO Stuart Miller said the operating environment “has deteriorated since our last earnings call.”
The average selling price for new orders was $359,000, below the $370,000 consensus estimate cited by Truist Securities. The sales pace was 4.1 homes per community per month, down 12% year over year.
Bank of America analyst Rafe Jadrosich pointed to “ongoing pricing pressure despite lower incentive levels,” citing weak housing demand and affordability headwinds.
Citigroup maintained a Neutral rating and lowered its target to $85 on September 21.
RBC Capital maintained an Underperform rating and cut its target to $69 on September 18, while Barclays maintained Underweight and lowered its target to $70.
Raymond James also reiterated Underperform, while Keefe, Bruyette & Woods cut its target to $75. Truist maintained Hold with a $75 target.
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