Canaccord Genuity ups target on Persimmon even after recent bounce for shares

Analysts at Canaccord Genuity have revised their target price for shares of Persimmon higher, from 2,400.0p to 2,720.0p, arguing that the stock had room to continue rising.

On the back of the homebuilder's most recent trading update, which they termed as "generally reassuring", they "tweaked" their estimates higher, adding that the group appeared to be making "good progress" with its customer care initiatives and that they anticipated further benefits in that area in 2020.

They also highlighted Persimmon's "strong" land bank and impressive attention to operational details that should support the builder's leading margins and returns over the medium-term.

"While political and macro risks remain elevated and significant, we would continue to see Persimmon as offering good relative value for investors continuing to want a position in the UK house-builders in the expectation of a broadly favourable outcome from the UK general election, despite the recent sector share price bounce," they said.

The Canadian broker also termed the firm's dividend yield of roughly 9.0% "very attractive", while praising its management team.

Furthermore, while the shares were changing hands on an estimated 2020 price-to-book multiple of 2.55, which was higher than its competitors, its return on invested capital was approximately 26.0%, against roughly 16.0% for its peers.

Canaccord kept its recommendation for the shares at 'buy'.