Despite Bellway PLC (LSE:BWY) reporting weaker demand trends and cost inflation squeezing its profit margins, shares in the housebuilder rose on Tuesday, with analysts continuing to recommend the shares.
Bellway's shares fell 4% in early trade but ended over 3% higher at 2,234p, down slightly over the past six months but up almost 14% since the start of the year, almost the best in the sector.
Despite the squeeze on customer demand from higher interest rates, the FTSE 250-listed group saw revenues in the 12 months to July only drop 3.7% to £3.4 billion with underlying profits 18% lower at £532 million.
The nine weeks since 1 August saw the private sales rate fall 29% year on year, while reservations were down 30% and order book volumes were down 36%.
Management guided to 7,500 completed sales in the 2024 financial year, with average selling prices (ASP) seen falling almost 5%.
Analysts said the full-year results were in line with expectations, with the headline figures having been released a few weeks ago.
UBS analyst Marcus Coyle said the completions guidance was 8% lower than the consensus forecast, with the ASP also lower than the City expected.
Guidance for 2.5 times dividend cover "broadly equates to a dividend of 50p per share", he said, which is some way short of the 129p average City forecast for next year's shareholder payout.
But UBS kept its 'buy' rating on the shares and 2,530p price target, noting that they trade at around a 25% discount to the past year's reported tangible net asset value.
Liberum analyst Edward Prest said the sales underlying rate per outlet per week is "slightly better than the sales rate in July".
He expects the consensus PBT forecast to come down by 20% to £200 million from the current £250 million.
Peel Hunt's Sam Cullen said: "The market clearly remains difficult, but Bellway's balance sheet and investment in land over the last few years should allow it to be one of the first back out when demand improves."