Deutsche Bank lifted Persimmon to 'buy' on Monday, noting that the housebuilder was managing sector headwinds more effectively than peers and continued to deliver resilient returns.
Source: Sharecast
DB said Persimmon's interim results were "robust", with 13% year‑on‑year volume growth helping offset 210 basis points of gross‑margin pressure and supporting 3% growth in pre‑tax profits.
While build‑cost inflation was expected to mirror that of the wider sector, Deutsche Bank said management plans to progressively counter this through self‑help measures and continued top‑line growth.
To reflect updated guidance, Deutsche trimmed its FY26-28 profit forecasts by 3% to 14%, but now expects broadly flat profits across FY25/27 -a far stronger profile than the declines anticipated elsewhere in the sector - leaving Persimmon generating around 9% return on equity on average between FY26 and FY28, roughly 50% higher than comparable peers.
Deutsche Bank said this level of return supports Persimmon's roughly 1x price/net tangible assets valuation, while giving no credit for any potential market recovery or longer‑term profit improvement.
DB did slightly lower its target price on Persimmon from 1,419p to 1,403p, but with the shares having weakened since its previous hold call, the analysys made the move to upgrade the stock to 'buy'.
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