Bellway downgraded to 'neutral' by Citigroup on valuation

Citigroup downgraded Bellway to ‘neutral’ from ‘buy’ but raised the target price to 2,540p from 2,160p, saying that the company is making very good progress but the valuation is up with events for now.

“Given the recent strong bounce in the share price (up by +20% over the last month and by around 60% over the last 12 months), along with the rest of the sector, valuation looks less compelling at current levels,” said Citi.

Still, the trading update confirmed the group is progressing well with its strategic objectives of growing volumes at strong margins with a focus on return on capital employed, the broker said.

“We believe that the group is well placed to continue to grow market share and deliver value over the medium term. The balance sheet remains in good shape with a land bank that supports further growth.”

Management has a good track record of delivering a decent return on capital relative to the sector, added Citi.

At 14:05 BST, the stock was flat at 2,327.00p.