Bellway shares 'up with events', says Deutsche Bank
Bellway
2,546.00p
16:40 26/04/24
Deutsche Bank downgraded housebuilder Bellway to ‘hold’ from ‘buy’ on Friday, saying the shares are largely "up with events".
FTSE 250
19,824.16
16:59 26/04/24
FTSE 350
4,470.09
16:59 26/04/24
FTSE All-Share
4,423.59
17:14 26/04/24
Household Goods & Home Construction
12,702.92
16:59 26/04/24
The bank said Bellway elicits numerous adjectives and 'pragmatic, sensible and cautious' can quickly morph into 'tepid, dreary and negative', depending on the zeitgeist.
"Its recent update evoked a negative reaction, reflecting concerns over productivity levels (so subjective in reality it is hard to make useful comparisons with peers) and a slew of additional costs," it said.
Deutsche reduced its 2020-22 pre-tax profit forecasts by 36-47% to reflect the impact of Covid-19.
"The shares now trade marginally below 2021E book value (circa 0.9x), despite a respectable return on average capital employed of 12.3% (likely above the cost of capital).
"However, to reflect significant reductions to our estimates, we lower our target price from 3,093p to 2,422p."