Deutsche Bank lifts Crest Nicholson to 'buy'

Deutsche Bank upgraded shares of housebuilder Crest Nicholson on Monday to ‘buy’ from ‘hold’ and lifted the price target to 250p from 202p as it said strong action has been taken to address the cost base and the stock is attractively valued.

Analyst Jon Bell said: "Crest has misfired more often than my 14 year old BMW but its current management team - still relatively new to their seats - has a steely (and welcome) determination about it.

"And as I sat in the gallery of the Chartered Accountants' Hall on a cold January morning listening to the company's FY results presentation, it was there for all to see. CEO Truscott and CFO Cooper had allowed no grass to grow under their feet.

"Quick to identify the company's swollen cost base, remedial action swiftly followed: next year's administrative expenses should be almost a third lower than 2019A levels; and two-thirds of £30m per annum procurement savings had been embedded by the time of the interims."

Bell said the benefits remain latent, obscured by the market's focus on the pandemic, but should bear fruit in the medium term.

He said the release of pent-up demand and the benefits of the Stamp Duty holiday have improved the near-term pricing outlook for the company. In the case of the latter, this is particularly so in the company's core South East footprint, it said, raising the possibility that it could report results towards the top end of its indicative range.

"For a company with a chequered history of meeting market expectations, simply reporting in line should go a long way towards restoring faith."

At 1100 BST, the shares were up 6.7% at 202.20p.