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Housebuilders gain more ground after Taylor Wimpey update

Discussion in 'Market News' started by Lily, May 25, 2016.

  1. Lily

    Lily Forum Member

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    Sector continues to be supported by Tuesday’s positive update

    Housebuilders continue to be supported by Tuesday’s positive update from Taylor Wimpey.

    Taylor has climbed another 2p to 195.6p as JP Morgan raised its target price from 220p to 250p and Deutsche Bank issued a buy note, lifting its forecast share price from 247p to 261p. Deutsche said:

    We believe investors will strongly appreciate Taylor Wimpey’s commitment to pay dividends across each year of the cycle (at more than 2% yield) even in a downside scenario. With special dividends supplementing dividend yield to 5.6% in 2016 with Deutsche Bank estimates suggesting scope for more than 7% from 2017 (even while Deutsche Bank estimates remain short of the group EBIT margin target) we believe the stock is difficult to ignore despite the industry uncertainties ahead of the Brexit vote.

    We have upgraded our 2016E-2019 earnings per share forecasts by 1-7% to reflect management’s clear statement of confidence in near term profitability. We remain more cautious than most as returns are close to peak, in our view, as inflation will moderate and labour costs remain a challenge.

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