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JPMorgan upgrades Barratt Developments, downgrades Taylor Wimpey, says housebuilders “not all built the same”

Published: 10:35 01 Jun 2018 BST

Housebuilding
JPMorgan's analysts also raised their target price for Persimmon to 3,250p from 2,950p

JPMorgan Cazenove has switched ratings on two UK blue chip housebuilders, downgrading Taylor Wimpey PLC (LON:TW. and upgrading Barratt Developments PLC (LON:BDEV) in a sector review concluding they are “not all built the same”.

The US investment bank upped its stance for Barratt to ‘overweight’ from ‘neutral’ and cut Taylor Wimpey back to ‘neutral’ from ‘overweight’, leaving price targets for both unchanged at 650p and 22p respectively.

READ: Barratt Developments rolling in more cash than it expected

In the note to clients, JPMorgan’s analysts said: “Over the last year, differences in earnings momentum between the large cap housebuilders have driven materially different stock performances. In the near term, we expect this to continue to be the case.”

They noted that Barratt “has underperformed heavily over the last year on earnings risk concerns that we think will prove unfounded – if anything, we see upside risk to FY19 estimates.”

The analysts added: “As a relative call, we downgrade Taylor Wimpey to N from OW, on the basis that while we still think it’s a high quality, low risk play on the sector, in the short term we think there’s less scope for surprise.”

READ: Taylor Wimpey to whack up the divi as it signals confidence in growth prospects

The JPMorgan analysts also raised their target price for Persimmon PLC (LON:PSN) to 3,250p from 2,950p and repeated an ‘overweight’ stance on the stock.

They said: “While Persimmon has outperformed strongly over the last year, we don’t think we’ve seen the last of the earnings upgrades”.

In mid-morning trading. Persimmon shares were up 1.1% at 2,863p, while Barratt gained 2.6% at 559.8p, while Taylor Wimpey just edged up 0.2% to 190.45p.

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