Source: Sharecast
Berenberg said Bellway, like its peer group, has experienced "a very challenging two-year period", with both a "significant decline" in customer demand, as well as "brutal margin erosion", with the group's FY24 pre-tax profits result down 65% from its peak two years ago.
However, Berenberg believes that the outlook from here was "clearly more optimistic" and said Bellway will participate in the steady, but not exuberant, recovery that it envisages across the wider housing market as it recovers the lost volumes and margin over a multi-year phase.
"With a lengthy landbank (relative to current build rates) and a solid enough balance sheet, we think that Bellway is well positioned to participate in the recovery," said the German bank, which reiterated its 'hold' rating on the stock.
However, despite the "attractive outlook", Berenberg noted that it still sees "more compelling" opportunities elsewhere in the sector.
Reporting by Iain Gilbert at Sharecast.com