Lennar (LEN) could post better-than-expected fiscal Q2 EPS while missing gross margin consensus expectations, Wedbush analyst Jay McCanless said Thursday in an earnings preview.

"Lennar has missed versus the consensus gross margin outlook for four quarters in a row through F1Q25," the analyst said. "That outcome is likely again in F2Q25 given the mortgage rate volatility after Trump's Liberation Day announcement."

Wedbush expects the company to post an EPS of $2 per share on revenue of around $8.3 billion, against consensus estimates of $1.96 on revenue of $8.2 billion. The results are due June 16.

Wedbush estimated gross margin of 18.0%, in line with the company's guidance and against consensus estimate of 18.6%.

The report said the volume over margin strategy may prolong any chance of gross margins stabilizing for builders with a customer focus higher than 50% on first time buyers.

"We remain cautious on entry level focused builders," the analyst said. Wedbush kept its neutral rating and a $130 price target.

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