Vistry Group PLC, MJ Gleeson and Bellway PLC are top picks in the housebuilding sector, which has shown signs of encouragement so far this year, according to Liberum.
Following reports from Barratt, Bellway and Redrow, Liberum pointed out all had highlighted better profits or trading than it had expected, while sales were improving in the fourth quarter, hinting towards a spring boost.
“It is too early yet to have a definitive view of the crucial spring selling season, but news of better sales rates and the market strengthening through January are helpful,” Liberum said.
It cut earnings per share forecasts for Bellway and Redrow by roughly 13% to 2,860p and 610p respectively though, up from Monday’s 2,158p and 510p, based on volume issues.
Bellway remained among its most favoured stocks, alongside MJ Gleeson and Vistry, which Liberum suggested would likely outperform the sector due to strong balance sheets, lower valuations and 2023 growth prospects.
Reports from the other six major housebuilders in the coming weeks are set to clarify if a bounce back for the UK’s housing market is definitely on the cards, Liberum suggested.
It added the spring budget on March 15 and the Bank of England’s interest rate decision on March 23 had a part to play in the sector’s share price performance.
Nonetheless, Liberum pointed towards “surprisingly” strong demand and falling mortgage rates as positive signs for the sector moving towards the warmer months.