Jefferies downgrades Crest Nicholson, ups Persimmon

In a note published on Tuesday, the broker upped Persimmon to ‘buy’ from ‘hold’, and cut Crest Nicholson to ‘hold’ from ‘buy’.

It said: "We remain positive on housebuilders, but post the recent rally look to be more selective on stocks and timing.

"While our top picks remain Taylor Wimpey and Bellway, we add Persimmon to our ‘buy’ list, seeing scope for a meaningful change in sentiment towards the group, given its position to leverage into an improving market.

"We downgrade Crest, seeing the discount to peers continuing, reflecting a lack of confidence in margin pick-up, while legacy sites continue to impact."

Jefferies also remained "cautious" on Barratt Developments, "given our view that upside in deliveries will be constrained by declining outlets numbers". It left its 'hold' rating on the stock unchanged.

Overall, Jefferies said UK housebuilders had rallied nearly 30% since October, with significant mortgage rate reductions and potential support for first-time buyers in March’s budget driving upside potential.

But it warned: "We see risk that as we near the budget, the pace of catalysts in the sector may tail off and share price momentum may moderate."

As at 1330 GMT, shares in Crest Nicholson were trading 2% lower at 209.8p, while Persimmon was up 1% at 1,462p.