Numis ups profit forecast, target price for Savills

Numis has upped both profit forecasts and its price target for Savills after a buoyant update from the upmarket estate agent.

The broker, which has an ‘add’ rating on the stock, has increased its target price to 1,561p from 1,340p, and lifted its 2021 full-year pre-tax profits forecast to £158m from £130m.

The adjustment follows an unexpected trading update on Tuesday from Savills, which said full-year profits were likely to be materially ahead of 2019.

Numis said: "This reflects continued strong trading in Asia and the UK, and some recovery in CEME [continental Europe and the Middle East] and North America, albeit the latter regions are yet to return to 2019 levels of activity.

"UK prime residential has also exceeded management expectations, with the tapering in performance not now expected until the 2022 full year."

The broker also improved its 2022 estimates, though it conceded: "We apply a more moderate increase for full-year 2022 pre-tax profits, from £145m to £152m, reflecting an anticipated moderation in UK prime residential markets and a progressive return of discretionary expenditure.

"We expect improved trading to result in an increase in net cash, to £200m in 2021, versus £178m in 2020 and our expectation of £120m."

Numis concluded: "Post the change to forecasts, Savills is trading on 17.2x PE for 2022. While this is a premium to its pre-pandemic multiple, it compares to CBRE and Jones Lang LeSalle, which trade on 18.6x and 16.6x respectively to December 2022, with Savills boasting a stronger balance sheet and also paying an c2% dividend."

As at 1430 GMT, shares in the FTSE 250 firm were ahead a little over 1% at 1,437.0p.