What Happened?
Shares of affordable single-family home construction company LGI Homes (NASDAQ: LGIH) jumped in the afternoon session after the company reported a significant increase in home closings for December and received a price target increase from an analyst. LGI Homes announced it had closed 569 homes in December, a 43% jump from the previous month. This brought the company's fourth-quarter total to 1,362 homes closed and the full-year number to 4,788. Following the strong operational update, Citizens analyst James McCanless raised the firm's price target on LGI Homes to $95 from $85. The analyst also kept an Outperform rating on the shares, pointing to the monthly closing reports as a key catalyst for the company.
After the initial pop the shares cooled down to $43.85, down 0% from previous close.
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What Is The Market Telling Us
LGI Homes’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 2.8% on the news that negative results from competitor Lennar (LEN) signaled weakness in the housing market. Lennar, a major homebuilder, reported that its earnings for the fourth quarter missed analyst estimates. The company also provided a soft outlook for its upcoming first quarter, with projections for new orders and deliveries falling short of expectations. Management noted that the housing market remained challenged by affordability issues and weak buyer demand. In response to these conditions, Lennar cut the average price of its homes by 10% in the previous quarter. The poor results and downbeat forecast from an industry leader created concern among investors about the health of the entire homebuilding sector.
LGI Homes is up 5.1% since the beginning of the year, but at $43.85 per share, it is still trading 53.3% below its 52-week high of $93.93 from January 2025. Investors who bought $1,000 worth of LGI Homes’s shares 5 years ago would now be looking at an investment worth $420.22.
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