Proactive Investors - Vistry Group PLC (LON:VTYV) is showing positive signs compared to its rivals and amid the worsening conditions in the UK housing market, say Liberum analysts.
Its returns should “hold up much better” than larger peers Persimmon PLC (LON:PSN) and Taylor Wimpey PLC (LON:TW), said the broker, as it “benefits from the resilience and growth” of its partnerships division.
Liberum analyst Charlie Campbell cut forecasts for all three of the housebuilders as, while house prices have proved “relatively resilient", site numbers are “not growing as we expected, due to planning delays and also housebuilder caution".
“The flip side is that prices matter more for long term value, and the stock market has correctly identified slower site openings as a sign that builders will remain disciplined."
Vistry acquired fellow housebuilder Countryside for £1.25bn in November, a move Campbell suggested will set it apart from other housebuilders as the UK market struggles.
Despite higher mortgage rates pushing down demand for newbuilds, the analyst upped his share price target for the company formerly known as Bovis Homes to 950p, expected upside of 27% compared to a last close at 753p.
Target (NYSE:TGT) prices were also upgraded for Berkeley Group Holdings PLC (LON:BKGH) and Taylor Wimpey as, along with Vistry, the trio's returns “are looking relatively more resilient compared to peers”, but the target for Persimmon was cut “as its returns are proving relatively less resilient”.
Liberum's ratings remained at 'buy' for all the companies in the sector, though, with Berkeley at 7% and Wimpey at 11% seen as offering the least upside, with Bellway PLC (LON:BWY) and MJ Gleeson offering the most at 37% to a target of 2,860p and 35% to a target of 560p respectively.
More positive signs are seen ahead for the sector, with the analyst expecting the market to only see “mild” price falls given a lack of supply of newbuilds and few signs that people are being forced to sell properties.
As well as this, “improved political stability, global bond market trends, improving bank risk appetite and peaking inflation are driving mortgage rates progressively lower”.