Credit Suisse hikes target price for Persimmon, stays at 'hold'

Credit Suisse hiked its target price on shares of homebuilder Persimmon, hailing it as the 'best-in-class' operator and the "most operationally efficient housebuilder" in its coverage universe.

The Swiss broker's analysts lifted their target on the stock from 2,008p to 2,592p, pointing to three factors to back up its case.

Those were: its strategy, a minimal exposure to London and continued support from Help-to-Buy.

Regarding the first of those, they emphasised the fact that Persimmon was targeting the first-time buyer, first-time mover market, pointing out how at an average selling price of £213,000 its product offering remained in "high demand".

Building on its strong land acquisition programme, increased build cost efficiencies should push EBIT margins higher, they added.

A sector leading asset turn should also support larger returns on capital employed.

Nevertheless, with the outfit already trading on a 32% premium to its sector - versus a long-run average of 6% - the above positive points were already being factored-in.

Hence, the recommendation was kept at 'hold'.

The shares were changing hands at 2.8 times' the company's fiscal year 2017 tangible net asset value.