Deutsche Bank upgrades Bellway, says current price good entry point

Bellway was on the rise on Thursday as Deutsche Bank upped it to 'buy' from 'hold' and lifted the price target to 3,745p from 3,716 as it took a look at the UK housebuilding sector.

DB said that with a strong reputation and more than 20% net tangible asset value growth per annum to 2020, the current share price is a good entry point into Bellway.

It noted that since the start of the year, the stock has underperformed both in absolute terms and relative to the sector on the perceived read-across from peer issues in London and the South, plus a change in management.

"The change in CEO, we would argue, was anticipated and we see no change in the credibility of the management team. The London/South issues look overplayed - while group revenue from London is ahead of peers, Bellway's private average selling price remains below the sector average and its strong and increasing focus on build efficiencies should provide support to margins."

Earlier this month, Bellway said it had broken through the 10,000 homes barrier for the first time as it reported a jump in full-year revenue and highlighted "favourable" trading conditions, but warned over slowing house price growth.

The company said completions of new residential dwellings rose 6.9% from 2017 to 10,307, while revenue was up 16% to almost £3bn. The reservation rate increased 7% to 200 per week and the group had net cash of £99m versus £16m the year before.

At 1300 BST, the shares were up 2.7% to 2,967p.