Jefferies slashes targets for UK housebuilders to reflect downturn scenarios

Analysts at Jefferies took an axe to their target prices for several of the UK's largest homebuilders, telling clients that bottom fishing in the sector might prove premature as industry data had yet to reveal the full extent of the recent financial and political turmoil.

Nonetheless, tough valuations should gain "credibility" as forecasts move to reflect downturn scenarios.

In turn, they said, that should leave significant upside to any evidence of more resilient housing demand and/or prices, quicker adaptation of build costs or discipline on cash and continued capital returns.

The speed, scale and duration of the downturn would remain hard to quantify for a number of months, they explained, penciling in a 25% drop in private volumes for 2023, alongside a 10% drop in home pricing and cost inflation of approximately 8-10%.

The analysts lowered their target price for shares of Berkeley Group from 4,539.0p to 4,330.0p, for Vistry Group from 1,046.0p to 744.0p, for Persimmon from 1,902.0p to 1,4850p, for Crest Nicholson from 307.0p to 229.0p and for Countryside Properties from 239.0p to 202.0p.

Their recommendation for all of the above homebuilders was kept at buy and that for the latter at hold.