Berenberg raises target price on Persimmon as group works on 'image problem'
Analysts at Berenberg raised their price target on British housebuilder Persimmon slightly, from 2,470p to 2,490p, on Wednesday, crediting the group for continuing to work hard to improve its "image problem".
FTSE 100
8,248.49
17:14 10/01/25
FTSE 350
4,521.32
16:59 10/01/25
FTSE All-Share
4,476.42
17:15 10/01/25
Household Goods & Home Construction
9,845.94
16:59 10/01/25
Persimmon
1,077.00p
17:00 10/01/25
In a research note dated 21 August but published on Thursday, Berenberg admitted that increased investments in customer service and satisfaction would depress volumes in 2019, its analysts expect this to be "a temporary blip" and anticipate that volumes will begin to recover "in 2020 and beyond".
In the meantime, Berenberg said Persimmon's "sector-leading landbank", which allows it to operate in areas of the country with strong demand and underlying house price inflation, would help it continue to deliver sector-leading returns.
The German broker also highlighted that Persimmon continued to operate with "one of the strongest balance sheets in the sector", with net cash after its 2 July dividend payment of £350.0 m estimated to be roughly £470.0m. The analysts also forecast a £900.0m cash balance at year-end.
The analysts said: "The current capital return programme, which supports the current 13% dividend yield, is due to end in 2020. However, with management targeting net cash of c£750m and assuming the market remains solid, we see scope for increased capital returns.
"With the shares trading at a 35% discount to recent history and offering a 13% dividend yield and 14% FCF yield, we reiterate our 'buy' recommendation and nudge up our price target to 2,490p."