- Taylor Wimpey
- 11 May 2026 15:33:26
Source: Sharecast
Taylor Wimpey pointed to a deterioration in pricing, a slight moderation in lead indicators and an expectation of increasing build cost inflation, the bank noted.
"The output of this is that we downgrade FY26/27/28 profit before tax by circa 20-30%," it said. "We now forecast return on equity of 5-6% FY26-28, the second lowest amongst the housebuilders on our forecasts, and around 20% below its closest large cap peers."
Deutsche Bank pointed out that despite this, Taylor Wimpey trades at a circa 15% P/NTA premium to these peers.
"We see this premium as wholly unjustified, and we think it is a function of investors buying into TW’s income attractions (circa 7% dividend yield)," DB said. "However, with shareholder distributions forecast to represent 150% of post-tax profits, alongside cash outflows from fire-safety, we hold concerns over its sustainability."
It said the price target cut reflects the lower ROE.
"We maintain our hold rating, but argue TW's relative rating is too high and this will lead to relative underperformance versus peers."
At 1530 BST, the shares were down 1.3% at 81.40p.