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Lennar De-Risking Portfolio Through Strategic Shift

1. Lennar completed the spin-off of Millrose Properties, enhancing its asset-light strategy. 2. 98% of Lennar’s lot position is now through land option contracts, boosting capital efficiency. 3. FY25 targets 8-10% YoY growth but faces high mortgage rates and affordability issues. 4. New home orders for 2Q25 expected at 22,500-23,500 amid challenging market conditions. 5. Rating revised to BUY with a target price of $121, reflecting positive future outlook.

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FAQ

Why Bullish?

The spin-off enhances operational focus and reduces capital risk, which may attract investors, as seen in past successful spin-offs like D.R. Horton. Historical spin-offs often lead to improved market performance in the long run.

How important is it?

The company's strategic shift reflects a significant change in operational dynamics, likely impacting market perception and investor interest significantly.

Why Long Term?

The structural changes from the spin-off will manifest over time, similar to past successful transitions in the industry, supporting sustained growth and operational stability.

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