10:35 AM EDT, 09/10/2025 (MT Newswires) -- Lennar ( LEN ) is expected to report fiscal third-quarter earnings below Wall Street's estimates due to soft demand trends, while the homebuilder's long-term margins are likely to face incremental headwinds, Oppenheimer said in a Wednesday client note.

The brokerage estimates Lennar ( LEN ) to post per-share earnings of $2.04 for the third quarter, while the current consensus on FactSet is for GAAP and non-GAAP EPS of $2.10 and $2.11, respectively.

Demand trends likely softened during the three-month period, pushing the company's volume metrics near the low end of its previously issued guidance, according to Oppenheimer. In June, Lennar ( LEN ) said it anticipated delivering between 22,000 and 23,000 homes in the third quarter.

The brokerage's gross margin checks on Lennar ( LEN ) are mixed, with lower rates and seasonality offset by higher incentives. There may also be incremental pressure on the homebuilder's selling, general and administrative expenses, resulting in a potential EPS miss, Oppenheimer's Tyler Batory wrote in the note.

Lennar ( LEN ) is scheduled to release its fiscal third-quarter results next week.

Lennar's ( LEN ) strategy to move towards land banking represents a potential headwind to gross margin, while the separation of Millrose Properties (MRP) from the company completed in February is likely to result in a "particularly large" incremental negative impact, according to Oppenheimer. The brokerage estimates a headwind of about 80 basis points on Lennar's ( LEN ) gross margin in fiscal 2026 from land deals involving Millrose.

The spin-off resulted in 87,000 home sites moving from Lennar ( LEN ) into the Millrose land bank, which represented 20% of total Lennar ( LEN ) lots at the time, the brokerage said. Once fully expensed, Millrose is estimated to add more than $500 million to the homebuilder's costs of goods sold in fiscal 2026, compared with Oppenheimer's previous forecast of $275 million.

Oppenheimer expects normal demand seasonality in the fourth quarter and a "slight" sequential increase in Lennar's ( LEN ) gross margin. "This outlook is mostly informed by the recent shift lower in mortgage rates and fixed cost leverage boosting margin," according to Batory.

The brokerage estimates Lennar ( LEN ) to report EPS of $2.87 in the fourth quarter, compared with the Street's view for non-GAAP EPS of $2.74.

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