Liberum downgrades Taylor Wimpey on valuation grounds

The broker said shares in the sector have started 2023 well, now up 38% from lows, after rising 18% in the year to date as the macro-economic outlook has improved.

Liberum said it still sees upside across the sector, but is becoming a little more selective. It downgraded Taylor Wimpey to ‘hold’ from ‘buy’ on valuation grounds after the shares’ outperformance, and kept the price target at 125p

Liberum said its preferred stocks are Bellway, MJ Gleeson and Vistry.

It likes Bellway for its strong balance sheet, lowly relative valuation, strong operational management team and balanced portfolio.

It also continues to favour Gleeson as its Home business will soon grow much more quickly than peers, given the underserved market in which it operates, and as its growth is much less capital-absorptive than peers.

"Vistry is another stock where a premium should be re-established to the sector. Partnerships should prove its resilience and premium growth in 2023, helping Vistry’s returns hold up much better than peers," it said.

Liberum upped its price target on Berkeley Group to 4,750p from 4,500p and maintained a ‘buy’ rating.