UBS lifts Bellway price target; says it's "a growth story not to be forgotten"

UBS raised its price target on Bellway to 2,560p from 2,140p.

“We believe in the context of our positive outlook on the UK housing market, Bellway continues to be an attractively valued and conservatively managed growth story,” it said.

The Swiss bank noted that Bellway has underperformed the UK housebuilding sector this year, rising 19% year-to-date versus the sector up 31%.

UBS said the company’s growth strategy is likely to yield an earnings before interest and tax compound annual growth rate of 10% between 2015 and 2019, in line with the sector, and ongoing return on capital employed of around 22%, which it believes is an attractive proposition at the current valuation.

It added that Bellway has placed itself in the “growth” camp of the sector while maintaining 3x dividend cover and utilising a relatively small amount of leverage.

UBS rates the stock at ‘buy’.

By 1200 BST, Bellway shares were up 2.4% at 2,356p.