Residential lot developer Forestar cuts annual delivery guidance on weak market conditions

Overview

• Forestar fiscal Q3 revenue rises 23% yr/yr to $390.5 mln, missing estimates

• Net income for fiscal Q3 falls 15% yr/yr to $32.9 mln

• Co lowers fiscal 2025 lot delivery guidance due to weak market conditions

Outlook

• Forestar updates fiscal 2025 lot delivery guidance to 14,500-15,000 from prior guidance of between 15,000 and 15,500

• Company maintains fiscal 2025 revenue guidance of $1.50 bln to $1.55 bln

• Forestar cites affordability constraints impacting new home sales pace

• Company expects $2.3 bln of contracted future revenue

Result Drivers

• LOTS SOLD - Residential lots sold increased 11% to 3,605 lots, contributing to revenue growth

• CONTRACTED LOTS - Lots contracted for sale rose 26% to 25,700, indicating strong future revenue potential

• D.R. HORTON RELATIONSHIP - Strategic relationship with D.R. Horton supports significant market share aggregation

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 4 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the construction & engineering peer group is "hold."

• Wall Street's median 12-month price target for Forestar Group Inc is $28.50, about 22.5% above its July 21 closing price of $22.08

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 6 three months ago

Press Release: ID:nBwc0lpjZa